THE  CASE  FOR 
CAPITALIS 


msKmrnmaamammmaBtammtm 


HARTLEY  WITHERS 


UNIVERSITY   OF  CALIFORNIA    SAN  DIEGO 


l!ll  II  III!   Illllllllllll 

3  1822  00721  6948 


(^  LIBRARY^ 

J 


UNIVERSITY  OF 
CALIFORNIA 

SAN  DIEGO 


Central  University  Library 

Date  Due 


CI  39  (1/91) 


UN.B,S,TVO.CAU.OBN.^^ 


|^"T822  00721  6948 


THE   CASE    FOR  CAPITALISM 


THE  CASE  FOR 
CAPITALISM 


BY 

HARTLEY  WITHERS 

AUTHOR   OF 
'THE   MEANING  OF   MONEY,"      "POVERTY  AND   WASTE,"   ETC. 


"For  men,  and  not  walls,  make  a  city." 

Thucydides. 


NEW   YORK 

E.     P.     DUTTON     &     CO. 

681  FIFTH  AVENUE 


Copyright,  1920. 
By  E.  p.  DUTTON  &  COMPANY 


All  Rights  Reserved 


PRINTED  IN  THE  UNITED  STATES  OP  AMERICA 


PREFACE 

To  make  a  better  world  we  want  better  men 
and  women.  No  reform  of  laws  and  institu- 
tions and  economic  systems  will  bring  it  unless 
it  produces  them.  Institutions  and  systems 
that  turn  men  and  women  into  machines 
working  under  the  control  of  officials  or  of 
monopolies  will  not  make  them  better  even  if, 
as  is  very  far  from  likely,  they  make  them 
better  off.  It  is  only  through  facing  life's 
problems  for  ourselves,  making  our  own  mis- 
takes and  scoring  our  own  hits,  that  we  can 
train  and  hammer  ourselves  into  something 
better.  Individual  freedom,  initiative  and 
enterprise,  have  been  the  life-blood  of  the 
Anglo-Saxon  race  and  have  made  it  what  it  is, 
pre-eminent  among  the  races  of  the  world 
because  its  men  and  women  can  think  and  act 
for  themselves.  If  we  throw  away  this  heri- 
tage because  we  think  that  regulation  and 
regimentation  will  serve  us  better,  we  shall  do 
a  bad  day's  work  for  ourselves  and  for  human 
progress.     And  yet  this  seems  to  be  the  object 


VI 


PREFACE 


to  which  many  earnest  and  sincere  reformers 
are  now  trying  to  lead  us,  when  they  ask  us  to 
accept  nationalization  of  industry  or  its  organi- 
zation under  Guild  monopolies,  as  a  remedy  for 
the  evils  which  are  evident  in  our  economic 
system.  If  they  succeed  life  will  cease  to  be 
an  adventure  and  become  a  drill ;  the  tendency 
to  variation  which,  as  science  teaches  us,  is  the 
secret  of  development,  will  be  killed  or  checked, 
and  we  shall  be  standardized,  like  Government 
boots. 

This  book  is  written  to  show  that  the  greater 
output  of  goods  and  Services  on  which  material 
progress  depends  cannot  be  expected  with 
certainty  under  any  form  of  Socialism  that  has 
yet  been  proposed ;  that  Capitalism,  though  a 
certain  amount  of  robbery  goes  on  in  its  back- 
yard, does  not  itself  rob  anybody,  but  has 
wrought  great  benefits  for  all  classes ;  and 
that,  if  improved  and  expanded  as  it  may  be 
without  any  sudden  change  in  human  nature 
such  as  other  systems  demand,  it  may  earn  for 
us  the  great  material  advance  that  is  needed 
to  provide  us  with  a  better,  nobler,  and  more 
beautiful  world. 

Hartley  Withers. 

London^  January  1920. 


CONTENTS 

PAGB 

Preface   .         .         .         .         .         .         .         .         v 

CHAPTER   I 
Introductory  ii 

The  Existing  Discontent — Rebuilding  or  Overturning  ? — 
The  World  that  we  want — The  Need  for  greater  Output  to 
secure  it — What  System  will  give  it  to  us  ? 

CHAPTER   II 
The  Weakness  and  Strength  of  Capitalism     .       24 

Its  Inequalities — Their  bad  Effects — Its  Advantages,  moral 
and  material — The  Reward  of  Effort — Value — The  Power 
of  the  Consumer — Capitalism  and  the  Democratic  Principle. 

CHAPTER   III 

The  Essentials  of  Production         ...       44 

Strength  and  Skill — Tools,  Material  and  Time — Manage- 
ment— Readiness  to  face  Failure — Crusoe's  Example. 

CHAPTER   IV 
The  Capitalist  Thief       .....       61 

Is  the  Capitalist  a  Thief? — The  Service  that  he  Renders — 
Messrs.  Bernard  Shaw  and  Ramsay  Macdonald  on  Rent — 
Socially  created  Wealth — Mr.  Macdonald  on  the  Value  of 
Capital — Ruskin  and  the  Plane, 
vii 


viii  CONTENTS 

CHAPTER  V 
Labour  and  its  Product  .....       88 

Does  Capital  rob  Labour  of  "Surplus  Value"? — Dr. 
Menger  and  Mr.  Snowden — Back  to  Crusoe — Surplus 
Value  largely  produced  by  Capital — Shared  in  by  Labour 
— The  Advantages  of  High  Wages. 

CHAPTER  VI 
The  Achievements  of  Capitalism     .         .         .113 

Great  Increase  in  Population — And  Output — Industrial 
and  Scientific  Progress — Financial  Development — Labour's 
Share  in  these  Benefits — Capitalism  and  Peace— Dr.  Shad- 
well  on  Mediaeval  and  Modern  Conditions. 


CHAPTER  VII 
The  Risks  of  State  Socialism  .         .         .         .138 

Socialism  Defined — The  Position  of  the  Worker — Possible 
Improvement  in  Output  —  Possibilities  of  Friction — 
Question  of  Official  Management — War's  Experience — 
The  Workers  and  the  Government. 


CHAPTER  VIII 
A  Picture  of  State  Socialism  .         .         .169 

Mr.  Robert  Tressall's  Description — Its  Attractiveness — 
State  Socialism  flouted  by  the  Guildsmen — Mr.  Brace, 
M.P.,  on  Bureaucratic  Control. 

CHAPTER   IX 
Guild  Socialism        ......     189 

Its  Resemblance  to  Syndicalism — Its  Diffculties — Mr. 
Cole's  Exposition — The  Position  of  the  State — "Degraded 
Status"  of  the  Workers — Proposals  for  its  Amendment — 
Would  they  work  well? — "  Catastrophic  Action." 


CONTENTS  ix 

CHAPTER  X  p^oE 

The  Guild  Programme     .....     213 

The  Attack  on  "Surplus  Value,"  Rent  and  Interest — 
Wages  and  Pay — Guild  Membership — Possibly  "worse 
off  than  we  are  " — The  Pay  of  Hierarchs — Inter-Guild 
Friction — Dealing  with  the  Capitalist. 

CHAPTER   XI 
Capitalism  and  Freedom  .....     236 

What  Capitalism  has  done  for  us — Consumer's  Freedom — 
Is  Capitalism  committing  Suicide? — Its  Mistakes  in  the 
Past — Labour  as  Capitalist— What  might  be. 


CHAPTER  I 

INTRODUCTORY 

It  is  easy  in  these  times  to  put  the  case 
against  any  existing  institution.  Most  of  us 
are  in  a  highly  critical  mood,  because  we  feel 
that  during  the  last  few  years  things  have 
happened  which  ought  never  to  have  happened, 
and  that  these  earth-shaking  events  were  not 
well  met  and  handled,  especially  on  their 
economic  side.  We  have  seen  the  whole  fabric 
of  civilization  in  danger  and  a  desperate  battle 
raging  to  save  it,  and  we  have  felt  that,  if 
civilization  had  been  better,  and  the  governors 
of  the  nations  had  been  more  worthy  of  their 
charge,  it  could  never  have  contained  the  seeds 
of  such  danger,  or  the  seeds  ought  never  to 
have  been  allowed  to  sprout  and  blossom. 
During  the  contest  we  have  seen  the  best  men 
in  all  the  countries  concerned — the  best  in 
strength  of  body,  courage  and  devotion — 
suffering  untold  hardships,  wounds  and  death, 
while  the  next  best  and  the  worst  have  stayed 
at  home  and   have  in  many  cases  made  large 


12      THE   CASE   FOR   CAPITALISM 

fortunes,  or  greatly  increased  their  wealth.  A 
world  crisis  which  ends  in  enormous  destruction 
of  life  and  property,  and  at  the  same  time  in 
the  enriching  of  many  of  those  who  were  not 
good  enough,  in  mind  and  body,  to  risk  their 
lives  to  meet  it,  seems  to  be  a  piece  of  sheer 
stupidity  and  injustice.  It  is  no  wonder  that 
many  impatient  minds  are  driven  to  the  con- 
clusion that  every  institution  which  existed  at 
the  time  when  these  crimes  and  absurdities 
were  perpetrated  should  be  cut  down,  rooted 
out  and  cast  upon  the  dust  heap. 

Is  this  state  of  mind  a  good  one  in  which  to 
set  out  on  the  task  of  mending  the  breaches 
that  have  been  made  in  the  walls  of  the  build- 
ing in  which  we  have  lived  ?  Is  it  wise,  because 
the  building  has  been  found  not  to  be  proof 
against  the  weather,  to  pull  it  down  in  disgust 
and  start  making  a  new  one  to  a  new  plan  and 
on  a  new  system  of  mechanics  which  has  never 
been  tested  and  may  turn  out  a  home  that  will 
not  even  stand  up  ?  Might  it  not  be  better  to 
improve  the  old  one?  The  need  for  amend- 
ment is  now  admitted  by  the  great  majority. 
The  only  question  to  be  decided  is  whether  the 
changes  made  are  to  be  on  lines  that  have 
produced  a  working  result ;  or  to  be  based  on 
imaginative   dreams   which   tell   us  how  much 


INTRODUCTORY  13 

better  everything  might  be  if  we  worked  under 
a  new  system,  which  has  only  been  sketched  in 
hazy  outline,  about  which  its  advocates  have 
shown  much  unanimity  in  disagreeing.  They 
want  to  see  a  world  in  which  every  one  will 
have  a  fair  chance  of  a  real  life  ;  so  do  most  of 
us.  They  want  to  turn  everything  upside  down 
in  order  to  get  it ;  and  they  may  be  right.  But, 
if  they  are  wrong,  their  experiment  will  work 
disaster.  If  we  can  get  the  same  result  along 
lines  that  have  been  tried,  is  it  not  safer  to 
work  along  them  and  avoid  this  risk  ? 

The  present  system  under  which  we  work 
and  exchange  our  work  for  that  of  others  is 
that  commonly  described  as  Capitalism.  Under 
it  each  one,  male  or  female,  can  choose  what 
work  he  will  try  to  do  and  what  employer  he 
will  try  to  serve  ;  if  he  does  not  like  his  job  or 
his  employer,  he  can  leave  it  or  him  and  try  to 
get  another.  He  cannot  earn  unless  he  can  do 
work  that  somebody  wants  to  buy,  and  so  he 
competes  with  all  other  workers  in  producing 
goods  or  services  that  others  want  and  will  pay 
for.  His  reward  depends  on  the  success  with 
which  he  can  satisfy  the  wants  of  others. 
Whatever  money  he  earns  in  return  for  his 
labour  he  can  spend  as  he  chooses  on  the  pur- 
chase of  goods  and  services  for  his  own  use  or 


14     THE   CASE    FOR   CAPITALISM 

for  that  of  his  dependents,  or  he  can  invest  it 
in  opening  up  a  business  or  industry  on  his 
own  account,  or  in  shares  and  debts  of  pubHc 
companies,  and  debts  of  Governments  or  public 
bodies ;  these  securities  will  pay  him  a  rate  of 
profit  or  interest  if  the  companies  or  debtors 
prosper  and  are  solvent.  Whatever  money  he 
earns  by  labour  or  by  investment  he  can,  after 
paying  such  taxes  on  it  as  the  State  demands, 
hand  on  to  any  heirs  whom  he  may  name. 

The  system  is  thus  based  on  private  property, 
competition,  individual  effort,  individual  re- 
sponsibility and  individual  choice.  Under  it, 
all  men  and  women  are  more  or  less  often  faced 
by  problems  which  they  have  to  decide,  and, 
according  as  their  decision  is  right  or  wrong, 
their  welfare  and  that  of  their  dependents  will 
wax  or  wane.  It  is  thus  very  stimulating  and 
bracing,  and  might  be  expected  to  bring  out 
the  best  effort  of  the  individual  to  do  good 
work  that  will  be  well  paid  so  that  he  and  his 
may  prosper  and  multiply.  If  only  every  one 
had  a  fair  start  and  began  life  with  an  equal 
chance  of  turning  his  industry  and  powers  to 
good  account,  it  would  be  difficult  to  devise  a 
scheme  of  economic  life  more  likely  to  produce 
great  results  from  human  nature  as  it  now  is  ; 
by  stimulating  its  instincts  for  gain  and  rivalry 


INTRODUCTORY  15 

to  a  great  output  of  goods  and  services  and  by 
sharpening  its  faculties,  not  only  for  exercise  in 
this  purely  material  use,  but  also  for  solving  the 
bigger  problems  of  life  and  human  intercourse 
that  lie  behind  it. 

In  fact,  however,  this  system  of  Capitalism 
is  at  present  perhaps  more  widely  criticized  and 
abused  than  any  other  human  institution.  And 
with  some  reason,  for  many  of  its  results  have 
been  bad,  and  there  is  room  for  great  improve- 
ment which  criticism  can  help.  But  criticism 
that  is  bad-tempered  and  unreasonable  will  do 
more  harm  than  good.  The  people  who  are 
working  on  this  great  business  of  producing, 
distributing  and  consuming  the  world's  wealth 
are,  in  the  mass,  ordinary  human  beings,  with 
the  good  and  bad  qualities  of  ordinary  folic. 
The  ordinary  man  and  woman  is  an  honest, 
good-natured  person  who,  though  not  too  eager 
to  work  very  hard,  does  not  want  to  rob  any- 
body else.  If  this  were  not  so,  society  could 
not  exist,  and  progress  would  have  been  im- 
possible. If  it  be  true — as  some  advocates 
of  Socialism  maintain — that  Capitalists  live  by 
robbing  workers  of  goods  which  they  have 
produced,  it  is  also  true  that  the  average 
Capitalist  does  not  know  that  he  is  doing  any 
such  thing,  and  that  if  once  this  crime  can  be 


i6     THE    CASE    FOR   CAPITALISM 

brought  home  to  him,  and  he  can  be  not  only 
convicted  but  convinced,  he  will  be  quite  ready 
to  give  up  methods  by  which  he  has  been 
preying  on  society. 

The  test  of  an  economic  system  is  its  success 
in  providing  us  with  a  good  world  to  live  in. 
In  what  sort  of  a  world  would  it  be  really 
pleasant  to  live  ?  To  begin  with,  there  would 
have  to  be  plenty  of  good  things  and  nice 
people.  Up  to  a  point,  the  good  things  come 
jfirst,  because  we  cannot  live  without  them. 
But  after  our  needs  have  been  met  in  the 
matter  of  necessaries  and  comforts,  up  to  a 
very  moderate  extent,  the  necessity  of  pleasant 
people  in  order  to  lead  a  pleasant  life  among 
them  becomes  overwhelming.  And  people  are 
pleasant  to  live  with  who  are  kindly,  generous, 
honest,  unselfish,  healthy,  keen  and  fully  de- 
veloped in  mind  and  body.  To  get  such 
people  we  evidently  need  a  great  increase  in 
the  output  of  material  goods.  It  is,  of  course, 
very  easy  to  find  many  examples  of  bad- 
tempered  people  who  are  well  off,  and  of 
others  who,  leading  lives  of  straitened  penury, 
set  an  example  of  saintly  behaviour.  But  it 
is  a  safe  working  rule  that  if  the  average 
human  being  can  have  a  better  supply  of 
commodities  and    comforts,  he  is  more  likely 


INTRODUCTORY  17 

to  be  pleasant  to  live  with  and  to  help  us  to 
get  the  world  that  we  are  looking  for  than  if 
he  is  living  under  conditions  of  scarcity  and 
discomfort,  and  for  real  development  we  must 
have  leisure  and  opportunity  for  education. 
Moreover,  we  want  not  only  good  things,  but 
beautiful  things.  Beautiful  things  and  beau- 
tiful houses  and  beautiful  cities  require  more 
time  and  better  materials  in  their  making  than 
the  shoddy  goods,  sordid  houses  and  dirty  and 
insanitary  towns  which  are  so  evil  a  blot  on 
our  so-called  civilization.  If  we  want  a  world 
in  which  every  article  we  use  is  well  and  beau- 
tifully made,  every  house  that  we  live  in  is 
well  and  beautifully  built,  and  every  town  in 
which  we  gather  is  as  beautiful  as  Oxford  or 
Canterbury,  and  more  so — because  modern 
ugliness  has  put  some  foul  blots  upon  these 
once  beautiful  centres — if  we  want  all  these 
things  we  must  spare  the  time  to  make  things 
well.  We  must  not  only  be  ready  to  maintain 
in  comfort  a  large  number  of  people  who  will 
give  no  thought  to  anything  else  but  the  pro- 
duction of  beauty  in  some  line  or  other  of 
industry,  we  must  also  light  in  everybody's 
mind  the  fire  of  desire  for  beauty. 

In  old   days  a   tyrant  or  a  wealthy  class  or 
a  church  was  able   to  produce   buildings  and 


i8     THE   CASE    FOR   CAPITALISM     , 

works  of  art  full  of  a  beauty  or  a  grandeur 
which  still  astonishes  us,  by  means  of  slave 
labour  or  by  the  devotion  of  members  of  a 
church  who  built,  for  example,  the  mediaeval 
cathedrals  to  the  glory  of  God  and  for  the 
sheer  pleasure  of  building  Him  a  noble  house. 
In  these  days,  economic  power  is  much  more 
widely  spread  and  will  be  spread  still  more 
widely  as  wealth  is  better  distributed ;  and 
we  cannot  expect  to  have  a  really  beautiful 
country  unless  the  greater  number  of  the  people 
know  what  beauty  is  and  try  to  arrive  at  it. 
It  is  an  open  question  whether  this  desire  for 
beauty  is  a  thing  that  can  be  taught,  but  we 
may  be  quite  sure  that  we  are  not  likely  to  get 
it  as  long  as  most  of  us  are  concerned  only 
with  the  narrow  problems  of  making  a  living, 
and  have  no  chance  of  full  development  of  our 
minds  and  perceptions.  In  other  words,  we 
want  education  and  facilities  for  travel  on  a 
scale  that  we  have  not  yet  dreamt  of.  We 
want  everybody  with  whom  we  come  in  con- 
tact to  be  really  well  taught  and  really  well 
informed,  not  necessarily  in  the  way  of  schooling 
and  book-learning.  Many  of  the  most  inter- 
esting people  whom  we  come  across  are  very 
deficient  in  both,  but  they  have  been  able  to 
have  had  wide  and  varied  experience,  to  have 


INTRODUCTORY  19 

seen  "many  men  and  cities,"  and  to  have 
exchanged  ideas  with  dwellers  in  many  distant 
lands. 

Here  again  it  is  easy  to  counter  the  argu- 
ment with  examples  of  homely  folk  who  have 
never  been  ten  miles  from  their  native  village 
and  yet,  owing  to  their  powers  of  observation 
and  sympathy,  have  made  themselves  masters 
of  all  that  life  means  within  a  small  compass. 
But  these  examples  of  genius  working  under 
circumstances  of  great  difficulty  do  not  make 
it  any  the  less  true  that  it  is  good  for  the 
average  human  being  to  roam  about  the  world 
and  submit  to  the  process  by  which  men  knock 
sparks  out  of  one  another  by  personal  impact. 
For  all  this — education  in  a  much  wider  sense 
than  has  yet  been  attempted  and  improvements 
in  human  intercourse  of  which  we  can  hardly 
yet  dream — a  great  increase  is  needed  in  the 
output  of  good  and  services  that  mankind 
enjoys. 

It  will  not  be  enough,  of  course,  unless  those 
to  whom  these  advantages  are  given  make  the 
right  use  of  them.  Travel,  as  it  is  at  present 
granted  to  a  comparatively  small  class,  often 
seems  to  fail  lamentably  in  widening  their  out- 
look. The  young  English  Philistine  who  goes 
to  Switzerland  only  for  skiing  and  tobogganing, 


20     THE    CASE    FOR   CAPITALISM 

and  regards  the  natural  beauties  of  his  own 
country  chiefly  from  the  point  of  view  of  their 
adaptabiUty  to  the  purposes  of  golf  links,  is  not 
a  good  example  of  mental  development  stimu- 
lated by  travel.  All  this  has  to  be  granted  ; 
but  even  those  who,  when  travelling,  confine 
themselves  most  carefully  to  the  hotels  and 
resorts  in  which  they  will  meet  no  one  but 
the  most  aggressively  national  spirits  of  their 
own  nation,  do  get  something  from  change  of 
air  and  scene.  Plenty  of  arguments  can  be 
brought  forward  against  any  attempt  at  trying 
to  get  at  a  better  world  in  which  everybody 
will  be  pleasanter  and  more  sensible,  but  there 
is  no  need  to  despair.  In  spite  of  all  that 
has  happened  in  the  last  few  years,  there  are 
most  encouraging  signs  of  an  improvement  in 
the  outlook  of  mankind  upon  its  duties  to  itself. 
Little  more  than  two  hundred  years  ago  a 
Te  Deum  was  sung  in  St.  Paul's,  specially 
composed  by  Handel  for  the  occasion,  to  cele- 
brate the  Peace  of  Utrecht  which  gave  England 
a  practical  monopoly  in  the  slave  trade  from 
West  Africa  to  America.  About  a  hundred 
years  ago,  at  the  end  of  a  war  which  had 
shaken  and  strained  England  almost  as  much 
as  the  one  which  we  have  just  gone  through, 
the   Income  Tax,  on  the  declaration  of  peace, 


INTRODUCTORY  2t 

was  immediately  abolished,  and  the  whole 
burden  of  a  heavy  debt-charge  was  thrown  on 
to  indirect  taxation  of  articles  of  consumption, 
which  pressed  most  wickedly  upon  the  poorer 
classes.  Our  ancestors  who  committed  this 
economic  crime  were  at  least  as  good,  accord- 
ing to  their  lights,  as  the  statesmen  of  to-day, 
but  they  did  not  understand  what  they  were 
doing.  Probably  there  are  many  to-day  who 
would  like  to  repeat  the  proceeding  now ;  but 
they  could  not  even  suggest  it,  because  public 
opinion  would  not  hear  of  it,  quite  apart  from 
the  fact  that  the  widened  suffrage  would  make 
it  politically  impossible.  On  all  sides  we  see 
evidence  of  great  improvement  in  what  is 
thought  about  the  manner  in  which  one  set  of 
men  should  be  treated  by  another.  Great 
strides  have  been  made  under  the  Capitalistic 
era  in  the  direction  of  making  the  world  a 
pleasanter  place  to  live  in,  and  though  some 
of  them  have  involved  the  development  of  new 
forms  of  suffering  and  disgrace,  we  can  still 
maintain  that  the  movement  has  been  forward 
on  the  whole. 

It  need  hardly  be  said  that  this  progress 
that  we  seek  must  not  be  confined  to  a  small 
class.  A  really  good  world  to  live  in  implies, 
not  only  that  we  live  there  pleasantly  among 


22     THE   CASE   FOR   CAPITALISM 

a  set  of  pleasant  people,  but  that  there  is  no 
horrible  suffering  and  destitution  in  the  next 
street  or  anywhere  else,  which  we  have  to 
forget  before  we  can  be  happy.  Wealth  in 
the  sense  of  ordinary  welfare  and  comfort  must 
be  not  only  abundant  but  well  distributed 
before  the  world  can  be  a  pleasant  place  to 
live  in  for  those  who  have  any  sympathy  with 
human  suffering. 

Thus  we  see  that  material  output,  though  it 
is  very  far  from  being  the  end  of  all  things,  is 
of  very  great  assistance  in  helping  to  produce 
the  sort  of  world  at  which  we  want  to  arrive. 
A  certain  amount  of  it  is  essential  to  existence, 
and  a  great  increase  in  it  will  help  very  much, 
as  human  nature  is  at  present,  to  make  every- 
body pleasant  to  live  with  in  the  truest  sense 
of  the  word,  to  make  the  world  and  all  the 
conditions  under  which  we  live  beautiful  and 
noble,  and  to  enable  all  to  be  educated  in  the 
truest  and  widest  sense  of  the  word.  It  follows, 
therefore,  that  in  order  to  get  at  the  world  that 
we  want,  an  increase  in  material  output  and  a 
great  improvement  in  its  diffusion  among  all 
classes,  are  essential.  When  we  consider  the 
economic  system  under  which  we  live  and 
alternatives  to  it  which  are  suggested  by  its 
critics,  the  first  question  that  we  have  to  ask 


INTRODUCTORY  23 

is,  How  far  it  and  these  alternatives  are  likely 
to  be  efficient  in  this  matter  of  material  output. 
We  cannot  get  a  really  good  world,  full  of 
good  and  noble  people,  unless  we  can  greatly 
increase  man's  power  to  produce. 


CHAPTER   II 

THE    WEAKNESS    AND    STRENGTH    OF    CAPITALISM 

Among  the  many  drawbacks  that  mar  the 
system  of  private  ownership  of  capital,  as  it  has 
been  hitherto  developed,  an  obvious  blot  has 
already  been  noted,  when  it  was  observed, 
some  pages  ago,  that  if  only  every  one  had  a 
fair  start  it  would  be  difficult  to  devise  a  more 
stimulating  arrangement  for  human  nature  as  it 
is  with  its  instinct  for  acquisition  and  rivalry. 
Under  private  ownership  of  capital  this  fair 
start  has  not  been  given.  Capitalism,  as  now 
understood,  is  usually  regarded  as  dating  from 
about  the  middle  of  the  eighteenth  century, 
when  what  is  called  the  Industrial  Revolution 
began.  Before  then,  the  tools  of  industry  were 
primitive  and  cheap,  and  it  was  compara- 
tively easy  for  the  worker  to  own  his  own 
capital,  in  the  shape  of  tools  and  raw  material. 
When  machinery  came  and  brought  with  it 
production  on  a  great  scale  in  large  factories,  a 
great  capital  was  necessary  to  success,  and  so 
the  worker  and  his  capital  were  divorced  from 

24 


WEAKNESS   AND    STRENGTH     25 

one  another.  Some  individual  or  body  had  to 
be  found,  prepared  to  provide  the  necessary 
equipment,  and  to  hire  those  who  had  strength 
and  skill  to  work  it. 

In  the  past  the  position  of  the  owner  of 
capital  has  been  strong,  because  capital  has 
been  generally,  if  not  always,  scarce  as  com- 
pared with  labour,  and,  until  labour  organized 
itself,  the  bargaining  power  of  the  owner  of 
capital  was  greater  than  that  of  those  who 
had  little  or  no  resources  behind  them.  This 
advantage  in  the  hands  of  the  capitalist,  how- 
ever, is  not  a  necessary  part  of  a  capitalistic 
system.  Capital  without  labour  and  labour 
without  capital  are  under  modern  conditions 
equally  powerless,  and  in  these  days  labour, 
with  its  growing  political  influence  and  the 
sympathy  of  public  opinion  whenever  it  can 
show  a  real  grievance,  is  fully  able  to  take  care 
of  itself.  Moreover  there  is  no  reason  why  the 
sharp  division  between  the  owners  of  capital 
and  those  who  work  its  machinery  should  be 
maintained.  Under  an  ideal  capitalistic  system 
every  worker  would  be  a  capitalist  and  every 
capitalist  would  be  a  worker.  And  this  is 
an  ideal  that  is  quite  within  the  bounds  of 
possibility. 

But  this  is  not  the  only  inequality  that  ma,4e 


26     THE   CASE    FOR   CAPITALISM 

the  race  for  material  success  an  unfair  contest. 
The  owning  class  not  only  controls  the  equip- 
ment of  industry,  but  also,  by  its  greater 
individual  wealth,  can  give  its  sons,  daughters 
and  dependents  a  better  and  longer  education 
and  bring  them  up  under  conditions — in  the 
matter  of  food,  clothing  and  access  to  good 
air — that  give  them  a  long  start  in  life's  race. 
Convention  and  custom  increase  the  inequality. 
Certain  jobs  and  positions  are  actually  reserved 
for  those  who  have  had  an  education  that  can 
usually  be  afforded  only  by  the  children  of  the 
well-to-do.  For  instance,  only  a  boy  of  ex- 
ceptional cleverness  can  rise  from  a  primary 
school  to  the  university  degree  that  is  necessary 
for  entry  into  the  learned  professions.  And 
many  other  positions,  though  there  is  no  such 
definite  bar,  are  practically  reserved  by  custom 
and  prejudice  to  those  who  speak  a  certain  kind 
of  English,  wear  a  certain  kind  of  clothes,  and 
behave  with  a  certain  kind  of  assurance  and 
confidence ;  all  which  gifts  are  only  to  be 
acquired  at  a  certain  kind  of  school,  or  in  a 
certain  kind  of  home  surroundings.  Luck  or 
ability  sometimes  enables  exceptional  persons 
to  overcome  these  bars.  Fleet  Street  tradition 
whispers  of  an  unsuccessful  plumber  who  made 
a  great  mark  as  a  journalist  and  a  great  fortune 


WEAKNESS   AND   STRENGTH     27 

as  a  newspaper  proprietor,  but  the  story  of  his 
faihire  as  a  plumber  was  probably  a  slander 
prompted  by  envy.  There  is,  however,  no 
need  to  be  libellous  in  order  to  find  scores  of 
men  who  have  risen  from  the  bottom  to  the  top 
of  the  ladder  of  wealth,  beginning  life  with 
nothing  behind  them  but  their  wits  and  their 
good  luck  and  ending  it  great  owners  of 
capital. 

Nevertheless  there  the  handicap  is.  The 
well-to-do,  under  the  private  ownership  of 
capital,  can  live,  if  they  have  enough  of  it,  on 
the  toll  that  it  takes  from  production  without 
doing  any  work  at  all,  and  if  they  want  to 
work  have  everything  made  easy  for  them  in 
the  shape  of  specially  reserved  posts,  and  the 
connections  and  influence  that  are  so  great  a 
help  in  making  a  start.  It  must  be  a  very 
great  temptation  to  those  who  are  rich  enough 
to  be  able  to  idle  through  life,  to  do  so  ;  and  the 
fact  that  very  few  succumb  to  it  shows  that 
some  sort  of  activity  is  a  natural  want  of  a 
healthy  and  normal  human  being.  There  has 
been  a  noticeable  change  in  this  respect  even 
within  the  memory  of  the  middle-aged.  The 
graceful  idleness  which  used  to  be  thought  so 
gentlemanly  is  now  much  less  popular  than  it 
was,  and  young  men  of  the  class  that  used  to 


28     THE    CASE    FOR   CAPITALISM 

go  to  the  university  as  to  a  social,  sporting  and 
athletic  club  were  approaching  life  from  a  much 
more  serious  point  of  view  even  before  the 
war.  It  is  curious  to  note  that  in  America  the 
tendency  seemed  to  be  in  the  other  direction. 
There  opinion  was  apparently  growing  in 
favour  of  the  creation  of  a  leisured  class  which 
would  do  something  in  life  besides  pursuing 
dollars.  A  leisured  class  that  uses  its  leisure 
to  do  public  work  that  is  otherwise  done  ill  or 
left  undone  is  certainly  a  national  asset,  but  it 
cannot  be  denied  that  under  the  capitalistic 
system  there  has  existed  a  class  of  most  un- 
amiable  folk  who  lived  narrow,  selfish  lives  on 
wealth  that  they  had  inherited,  grumbled  at 
paying  taxes,  forgetting  that  if  the  Government 
did  not  protect  them  and  their  property  they 
would  be  quite  unable  to  earn  a  living,  and 
seemed  to  expect  the  whole  world  to  be 
managed  for  their  convenience  and  comfort. 
Most  of  us  have  suffered  from  such  people,  who 
are  apt  to  gather  at  such  resorts  as  residential 
hotels.  They  were  generally  quite  unable  to 
amuse  themselves,  and  lived  lives  of  unprofit- 
able boredom,  a  nuisance  to  themselves  and  to 
most  people  whom  they  met. 

This    handicap    of   inequality    was    thus    in 
many  cases  bad  for  those  who  enjoyed  it.     For 


WEAKNESS   AND   STRENGTH     29 

those  who  started  with  it  against  them  it  must 
have  often  been  a  daunting  influence  if  it 
affected  them  seriously.  But  how  far  did  it 
do  so  ?  The  average  man  surely  aims  at  being 
moderately  successful  in  the  conditions  under 
which  he  starts.  One  can,  in  these  matters, 
only  judge  from  one's  own  experience.  To 
myself,  born  into  the  circumstances  of  an 
ordinary  middle-class  family,  it  never  occurred 
that  I  was  handicapped  by  the  fact  that  many 
people  were  born  with  much  easier  chances 
of  much  greater  success.  There  was  a  road 
clearly  marked  out  for  me.  Somehow  I  had  to 
make  a  living,  and  the  fact  that  some  people 
were  not  under  that  necessity  was  not  a  thing 
that  influenced  me  one  way  or  the  other  in 
approaching  the  problem.  But  this  may  only 
have  been  because  I  was  thoughtless  or  un- 
imaginative, and  I  remember  when  I  was  at 
Oxford  hearing  a  very  brilliant  man  of  my 
year  remark  that  it  made  him  "  feel  Socialistic  " 
when  he  was  starting  off  to  an  early  morning 
lecture  and  saw  other  men  setting  out  for  a 
day's  hunting.  In  this  case  at  any  rate  the 
early  recognition  of  what  seemed  to  be  economic 
injustice  had  no  practical  effect  in  checking 
effort.  My  old  friend  may  have  felt  Socialistic, 
but  he  went  off  to  his  lecture  and  did  his  day's 


30     THE    CASE    FOR   CAPITALISM 

work,  and  is  now  a  shining  ornament  of  the 
Indian  Civil  Service. 

But  we  of  the  middle  class,  of  course,  have 
no  right  to  talk  as  if  we  had  any  real  grievance 
under  the  capitalist  system.  We  had  quite  as 
much  as  was  good  for  us,  and  got  an  education 
and  tradition  that  generally  stimulated  us  to 
make  fairly  good  use  of  the  powers  with  which 
we  were  born.  The  question  must  look  very 
different  to  those  who  view  it  when  born  under 
conditions  of  destitution,  and  have  imagination 
enough  to  see  how  great  are  the  disadvantages 
which  this  accident  brings  with  it.  In  this 
case  it  must  often  happen  that  despairing 
apathy  is  a  very  real  clog  to  effort,  and  there  is 
small  reason  to  wonder  if  many  of  those  so  born 
not  only  feel  Socialistic,  but  put  much  energy 
and  bitterness  into  working  for  schemes  to 
reconstruct  society  on  a  new  basis.  If  a  new 
basis  of  society  were  really  going  to  produce  a 
better  life  for  the  community  as  a  whole,  most 
of  us  would  sympathize  strongly  with  this 
ambition  ;  but  doubt  on  this  point  is  the  reason 
why  this  book  is  being  written. 

It  seems,  however,  that  the  inequality  only 
has  to  be  lessened  in  order  to  modify  very 
greatly  its  adverse  effect  on  those  who  suffer 
from  it  most.   In  America  Capitalism  has  grown 


WEAKNESS   AND   STRENGTH     31 

with  a  vigorous  and  perhaps  ruthless  strength, 
unchecked  by  the  many  feudal  and  social  re- 
strictions which  have   in   this    country  turned 
the   edge   of  its   power.       But   owing   to   the 
circumstances  there  ruling — the  wealth  of  the 
country  and  the  unlimited  power  of  expansion 
that  its  undeveloped  resources  have  placed  in 
the   hands  of  its  citizens — the  way  from    the 
bottom  to  the  top  has  been  more  open.     The 
traveller   there   seemed    to   find   himself   in   a 
country  in  which  there  were  no  bars  between 
class  and  class.     Those  at  the  bottom  looked 
on  those  farther  up  as  people  who  had  gone 
ahead  but  might  be  caught  up  and  would  be. 
There  was  no  sense  of  a  heavy  handicap.     I 
came   in    contact  in   a  curious  way  with    this 
cheerful  sentiment  when  in  a  hotel  in  Denver 
in  191 1.     A  Swedish  chambermaid  when  I  \vas 
leaving  was  good  enough  to  say  that  she  was 
sorry  I  was   going  because   I  was  "  nice  and 
clean  in  my  room."     I  asked  her  if  she  would 
like  to  come  and   be  a  maid  in  my  home  in 
England.     She  declined  on  inquiring  into  the 
possibilities  of  the  position,  but  added  :  "  I  tell 
you  what ;  I  won't  come  and  be  a  maid  in  your 
home,  but  I'll  marry  some  fellow  who'll  make 
a  pile,  and  then  I'll  come  and  stay  with  you." 
I    gave   her   my  card,  and   I   hope    and    fully 


32     THE    CASE    FOR   CAPITALISM 

expect  that  some  day  she  will  arrive,  with  the 
husband  and  the  pile  in  her  train. 

It  thus  seems  that  the  drawbacks  of  inequality 
are  bad  for  a  limited  number,  both  of  those 
who  are  apparently  benefited  by  them,  and  of 
those  to  whom  they  are  a  handicap,  but  that 
their  adverse  effect  on  the  latter  can  be  greatly 
reduced,  if  the  inequalities  of  birth  and  fortune 
are  not  allowed  to  be  a  serious  bar  to  success 
in  life.  When  we  have  granted  all  this,  we 
have  next  to  consider  what  are  the  advantages 
that  the  capitalistic  system  carries  with  it.  In 
the  first  place,  there  is  the  moral  advantage 
involved  by  individual  choice  and  responsibility 
which  make  men  and  women  of  us,  while 
grandmotherly  regulations  under  State  or  Guild 
monopoly  would  make  us  into  machines.  In 
the  second,  it  is  clear  that  the  ordinary  man 
will  work  harder  and  better  if  he  knows  that 
the  result  of  his  work  is  going  to  be  an  im- 
provement in  his  economic  position  and  in  that 
of  his  dependents.  For  every  man  to  work  for 
all  the  rest  just  as  hard  as  he  will  now  work 
for  his  own  hand  is  an  ideal  to  which  human 
nature  may  some  day  attain  ;  but  we  have  not 
yet  arrived  there,  and  if  we  try  to  make  things 
better  by  assuming  that  we  have,  we  may  put 
back  the  clock  of  progress  by  a  century  or  two. 


WEAKNESS   AND   STRENGTH     33 

The  incentive  to  effort  that  is  given  by  the 
power  of  acquisition  is  at  present  the  great 
driving-force  that  constantly  improves  man's 
control  over  nature.  If  we  took  it  away  we 
might  find  not  only  that  the  improvement 
ceased,  but  that  there  was  a  very  serious 
decline  in  the  output  of  any  country  that  tried 
the  experiment ;  and  we  always  have  to  re- 
member that  a  country's  output  is  all  that  it 
has  to  live  on,  apart  from  the  accumulations 
out  of  past  output,  which  would  very  soon  be 
exhausted. 

From  a  purely  economic  point  of  view  the 
advantage  of  a  reward  for  effort  in  proportion 
to  its  success  seems  to  be  overwhelming.  It 
is  true  that,  as  things  are,  success  in  production 
or  organization  often  comes  from  forcing  very 
questionable  goods  or  services  on  a  stupid  and 
ignorant  public.  But  that  is  the  public's  fault 
for  being  stupid  and  ignorant,  and  what  is  the 
alternative  ?  Either  an  equal  reward  for  every- 
body whatever  the  effort  made  and  whatever 
the  work  produced — a  system  that  would,  as 
things  are,  simply  mean  that  an  ever-increasing 
body  of  sluggards  would  live  on  an  ever- 
dwindling  and  more  disgusted  body  of  workers; 
or  else  some  new  device  for  a  reward  in  pro- 
portion to  what  is  called  the  "social  value"  of 
c 


34    THE    CASE    FOR   CAPITALISM 

the  work  done.  What  this  social  value  really 
means  it  is  hard  to  say.  What  is  the  social 
value  of  Mr.  Charlie  Chaplin  as  compared  with 
a  coal-hewer  ?  And  who  is  to  decide  the  ques- 
tion? If,  as  seems  most  likely,  it  is  to  be  a 
popularly  elected  body,  their  election  would  be 
a  pretty  picture  of  glib  promise-makers  com- 
peting for  the  suffrages  of  those  whose  power 
to  help  themselves  out  of  the  general  store  of 
wealth  they  were  going  to  decide.  If  the  de- 
ciding body  is  to  be  composed  of  Government 
officials  the  results,  though  less  obviously 
disgusting,  would  probably  be  still  more  un- 
satisfactory in  the  end. 

This  question  of  the  reward  of  effort  is  the 
most  difficult  problem  that  one  hits  one's  head 
against  when  one  tries  to  grope  a  practical 
path  through  economic  theory.  If  the  reward 
is  to  be  in  proportion  to  the  market  value  of 
the  work  done,  inequalities  that  will  have  bad 
effects  will  certainly  arise.  These  bad  effects 
seem  on  the  whole  to  be  preferable  to  the 
worse  effects  on  the  general  output,  out  of 
which  we  all  have  to  live,  that  are  likely  to 
follow  from  rewarding  everybody  not  for  the 
work  that  they  do  but  for  merely  having  taken 
the  trouble  to  be  born,  like  the  Marquis  in 
the  French  farce.     The  present  system  can  at 


WEAKNESS   AND   STRENGTH     35 

least  claim  the  merit  of  having  worked  in- 
different well  and  of  being  obviously  capable 
of  improvement,  if  the  community  will  only 
apply  a  little  more  sense  to  the  objects  on 
which  it  spends  its  money.  Under  it  the  value 
of  our  work,  like  that  of  everything  else,  is 
what  it  will  fetch — that  is,  what  we  can  get  for 
it  out  of  our  fellows.  If  they  are  vulgar,  taste- 
less and  stupid  we  can  sell  them  rubbish  and 
grow  fat  on  them,  if  we  happen  to  be  greedy 
rogues.  The  fact  that  many  of  them  are 
vulgar,  tasteless  and  stupid  thus  gives  greedy 
rogues  a  chance  of  which  they  make  ready 
use ;  and  so  the  unpleasant  sight  is  daily  seen 
of  greedy  rogues  battening  on  vulgar  stupidity, 
and  so  getting  for  themselves  all  the  power 
and  influence  that  wealth  brings  with  it.  And 
then  moralists  naturally  exclaim  that  there  is 
dreadful  villainy  abroad,  and  that  the  laws 
ought  to  be  made  much  stricter  for  catching 
and  punishing  it ;  and  short-cutting  reformers 
cry  out  that  there  is  no  remedy  for  such  a 
system  except  its  abolition  and  the  substitution 
of  a  new  way  of  rewarding  people  which  shall 
not  in  any  way  depend  on  the  price  at  which 
they  can  sell  their  work.  But  surely  the  true 
remedy,  though  a  terribly  slow  one,  is  for  the 
community  to   contain  a   smaller  and   smaller 


36     THE    CASE    FOR   CAPITALISM 

number  of  vulgar,  tasteless  and  stupid  people 
so  that  it  shall  grow  continually  more  difficult 
for  bad  work  to  get  a  good  price. 

After  all,  however  we  may  beat  about  the 
bush,  the  value  of  anything  that  has  to  be 
exchanged  or  sold  is,  and  must  be,  nothing  but 
what  we  can  get  for  it,  whether  the  thing  be 
our  own  work  or  some  article  that  we  have 
otherwise  acquired.  Economists  have  ob- 
scured the  question  of  value  by  distinguishing 
between  Value  in  Use  and  Value  in  Exchange, 
and  otherwise  surrounding  it  with  subtleties 
that  the  ordinary  man  cannot,  and  does  not 
want  to,  understand.  The  value  of  anything 
that  I  have  to  sell  is  what  I  can  get  for  it,  and 
the  value  of  anything  that  I  want  is  the  amount 
of  my  work,  or  of  goods  that  I  possess,  or  of 
money  that  I  will  give  and  the  owner  of  it 
will  accept.  When  expressed  in  money,  value 
becomes  price. 

Many  things,  such  as  friendship,  are  most 
precious  possessions  but  have  no  value  in  an 
economic  sense  because  they  cannot  be  bought 
and  sold,  and  would  lose  their  real  worth  if 
they  could.  From  the  confusion  that  this  fact 
produces  the  notion  arises  that  there  can  be 
such  a  thing  as  "inherent"  value  in  an  article 
apart  from  anybody's  desire  for  it,  and  thence 


WEAKNESS   AND   STRENGTH     37 

we  easily  fall  into  the  fallacy  which  tells  us 
that  a  thing  must  be  valuable  because  a  certain 
amount  of  work  and  energy  have  been  put 
into  it.  Work  and  energy  may  be  lavished 
on  the  production  of  something  that  nobody 
wants,  but  if  there  is  no  demand  for  it  it  will 
have  no  economic  value. 

Economic  text-books  tell  us  that  there  are 
goods,  such  as  air,  which  are  essential  to  life 
and  so  have  incalculable  "value  in  use"  but 
are  provided  by  nature  to  an  unlimited  extent 
and  so  have  no  "value  in  exchange."  There- 
by they  merely  confuse  themselves  and  their 
readers.  Obviously  nobody  will  pay  for  any- 
thing that  is  given  to  him  free,  except  perhaps 
the  American  millionaire  who  left  his  hotel 
because  he  was  not  charged  enough  to  enable 
him  to  feel  that  he  was  really  "having  a  good 
time."  Air,  when  it  is  supplied  by  Nature, 
has  no  value  in  an  economic  sense  because  no 
one  will  give  anything  for  it,  and  to  say  that 
it  has  a  "value  in  use"  because  we  should  pay 
all  that  we  have  for  it  if  it  was  not  there,  is 
only  to  introduce  a  quite  irrelevant  confusion 
into  economics,  which  is  ultimately  an  inquiry 
into  the  terms  on  which  men  produce  and  ex- 
change goods.  When  and  where  air  is  scarce 
it  is  paid  for.     The  Central  London  Railway 


38     THE   CASE    FOR   CAPITALISM 

has,  to  the  great  benefit  of  its  passengers,  paid 
for  a  system  by  which  its  tunnels  are  supplied 
with  air ;  and  seaside  lodging-house  keepers 
make  a  handsome  harvest  out  of  Londoners, 
who  come  to  stay  in  otherwise  most  unattrac- 
tive spots  in  order  to  breathe  sea-air  and  get 
the  London  soot  out  of  their  lungs. 

Value  is  merely  a  question  of  the  extent  to 
which  somebody  wants  a  thing  in  relation  to 
the  extent  to  which  its  present  owner  wants 
to  keep  it.  It  thus  depends  to  a  great  extent 
on  place,  since  an  article  that  is  a  drug  in  the 
market  here  may  be  scarce  to  the  point  of 
preciousness  somewhere  else.  As  was  well 
shown  by  the  answer  of  the  Scotch  drover 
when  a  Londoner  remonstrated  with  him  for 
the  prices  at  which  he  was  selling  his  beasts 
at  a  Highland  fair,  and  told  him  that  if  he  took 
them  to  Smithfield  he  would  get  twice  the 
money  for  them.  "Vera  true,"  said  the  Scot ; 
"and  if  I  could  take  Loch  Lomond  to  Hell  I 
should  sell  it  for  half  a  croon  a  glass."  Value, 
then,  is  what  we  can  get  for  a  thing  or  what 
we  have  to  give  for  it,  when  we  work,  as  prac- 
tically all  of  us  do  now,  in  co-operatiojt  with 
our  fellows,  making  something  or  doing  some- 
thing that  they  will  pay  for  and  using  their 
payments  to  us  in  paying  for  work  that  they 


WEAKNESS   AND   STRENGTH     39 

do.  If  we  were  self-sufficing  and  made  every- 
thing that  we  wanted  for  ourselves,  value  would 
still  be  determined  by  the  same  principle,  be- 
cause we  should  still  have  to  decide  how  much 
of  our  work  and  exertion  was  worth  putting 
into  the  production  of  any  article  that  we 
desired.  It  would  still  be  a  question  of  the 
degree  of  desirability  and  the  amount  of  effort 
that  we  were  prepared  to  give  in  exchange  for 
an  object  that  we  wanted. 

If  then  the  value  of  everything  that  has  to 
be  exchanged  is  the  sum  of  things  that  we  can 
get  for  it,  how  is  the  basis  of  exchange  to 
be  arrived  at  ?  Capitalism  leaves  the  question 
to  be  decided  by  competition,  so  putting  the 
ultimate  decision  concerning  the  price  of  any 
article  of  common  use  into  the  hands  of  the 
average  consumer.  The  consumer  cannot,  of 
course,  say  that  he  will  have  an  article  at  a 
price  at  which  it  is  impossible  to  produce  it. 
But  he  can,  under  Capitalism,  say  that  if  he 
cannot  have  it  at  a  price  he  will  take  something 
else  instead.  "  Whoever  ultimately  fixes  Prices,' 
said  the  New  Age  of  August  14,  19 19,  "con- 
trols thereby  the  distribution  of  the  wealth  of 
the  world."  Under  Capitalism  this  power  is 
given  to  the  average  consumer,  and  this  is  an 
enormous  advantage  on  the  side  of  Capitalism 


40     THE    CASE    FOR   CAPITALISM 

as  compared  with  any  other  system  that  has  yet 
been  devised.  For  it  means  that  we  have  to 
work  to  satisfy  the  wishes  of  our  fellows,  as 
expressed  in  their  demand  for  goods  and 
services.  Their  demand  may  be  ill-judged  and 
faulty,  but  it  is  real  and  human,  and  it  is  the 
expression  of  individual  choice  freely  exercised. 
Under  State  Socialism  the  value  of  our  work — 
what  we  could  get  for  it — would  apparently  be 
the  reward  which  Government  officials  thought 
fit  to  award  to  us.  We  should  be  working  not 
to  please  the  ordinary  human  being  with  all  his 
faults  and  foibles,  but  to  earn  the  approval  of 
an  inspector,  whose  decision  would  be  based  on 
red-tape  rules  and  form.ulas  drawn  up  and  enun- 
ciated and  annotated  in  offices  tenanted  by 
beings  who,  from  the  nature  of  their  duties, 
would  be  more  or  less  out  of  sympathy  with 
common  humanity.  Under  Guild  Socialism,  as 
will  be  seen  later,  every  guild  would  apparently 
work  largely  according  to  the  fancy  of  its  mem- 
bers ;  and  how  they  would  arrive  at  a  decision 
of  the  value  of  the  work  so  done — that  is  at  a 
basis  on  which  their  products  should  be  ex- 
changed— is  one  of  the  many  problems  that  the 
advocates  of  the  system  do  not  seem  yet  to  have 
fairly  faced. 

Capitalism  leaves  the  question  of  the  value  of 


WEAKNESS   AND   STRENGTH     41 

work  done  to  the  buyer,  that  is  to  the  average 
consumer.  It  is  thus  much  more  truly  demo- 
cratic and  in  favour  of  freedom  than  either  of 
the  rival  systems.  Under  it  nobody  can  earn 
a  penny  unless  somebody  else  wants  his  work. 
It  may  be  thought  that  the  capitalist,  or  the 
manager  who  organizes  production  on  the 
capitalist's  behalf,  has  the  final  say  as  to  what 
goods  shall  be  produced,  and  this  delusion  is  at 
the  bottom  of  much  of  the  talk  that  is  heard 
nowadays  about  the  tyranny  of  capital  and  of 
its  ruthless  decisions  about  the  objects  to  which 
the  labour  that  it  hires  is  to  be  devoted.  But 
the  capitalist  and  the  manager,  unless  they  are 
continually  successful  in  meeting  a  public  de- 
mand for  the  goods  that  they  produce  or 
distribute,  will  very  soon  be  in  Queer  Street. 
If  the  capitalist  puts  his  money  and  the  manager 
his  organizing  power  into  turning  out  or  turning 
over  goods  that  nobody  wants,  there  will  be  no 
Interest  or  profit  for  the  former  and  no  salary 
for  the  latter.  Value  under  the  capitalist  system 
thus  depends  directly  on  the  popular  voice,  and 
will  do  so  more  and  more  as  wealth  is  better 
distributed,  as  we  hope  and  are  determined  to 
see  it.  At  the  same  time,  the  tastes  of  the 
minority  are  not  neglected,  because  under 
competition  a  minority  that  is  large  enough  to 


42     THE    CASE    FOR   CAPITALISM 

express  an  effective  demand  will  get  it  satisfied. 
To  make  the  system  work  really  well  and  only 
give  good  rewards  to  good  work,  it  is  thus  only 
necessary  to  train  the  great  mass  of  individuals 
who  make  up  the  popular  voice  to  judge  better 
concerning  the  things  that  they  want  to  buy. 
This  is  a  long  and  difficult  process,  but  it  works 
side  by  side  and  hand  in  hand  with  real  pro- 
gress, which  can  only  be  got  by  creating  a 
community  composed  of  individuals  who  are 
good  and  sound  in  every  sense.  No  rearrange- 
ment or  rebuilding  of  systems  and  institutions 
will  do  any  good  that  fails  to  produce  good  and 
sound  men  and  women,  any  more  than  the  most 
cunning  cooking-stove  will  make  a  good  omelette 
out  of  bad  eggs. 

Capitalism  then  is  essentially  democratic. 
State  Socialism  would  hand  us  over  to  the 
regulation  of  the  impervious  and  elusive  bureau- 
crat. Guild  Socialism  would  leave  the  consumer 
to  the  tender  mercies  of  producing  Guilds. 
Capitalism  puts  the  real  power  in  the  hands  of 
the  average  consumer,  and  so  suffers  from  and 
rejoices  in  all  the  weakness  and  force,  all  the 
hopefulness  and  despair,  that  are  associated 
with  democracy.  If  democracy  wins  its  battle 
by  producing  a  race  of  men  fit  to  work  it, 
then    its    victory  will    cure    the   worst  evils  of 


WEAKNESS   AND   STRENGTH     43 

Capitalism.  It  will  no  longer  be  possible  for 
providers  of  rubbish  to  make  fortunes  by  selling 
it  to  fools,  or  for  company  promoters  and 
swindlers  and  "sharepushers"  to  found  county 
families  out  of  the  gains  of  fraud  at  the  expense 
of  silliness,  or  for  unnecessary  middlemen  to 
take  toll  on  what  we  consume  because  shop- 
keepers do  not  know  their  business,  or  for 
advertisers  to  wax  fat  because  buyers  do  not 
know  their  wants.  But  Capitalism  as  it  might 
be,  is  a  subject  for  a  later  chapter.  At  this 
stage  of  our  inquiry  it  is  enough  to  have  shown 
that  by  giving  the  word  of  command  to  the 
average  consumer  it  is  based  on  democratic 
principle,  and  will  stand  or  fall  with  the  success 
or  failure  of  that  principle  in  justifying  itself. 

If  democracy  fails  and  we  go  back  to  Divine 
Right,  not  of  kings  but  of  bureaucrats  or  guilds- 
men,  then  to  those  of  us  who  believe  in  freedom 
it  will  not  be  a  matter  of  great  moment  under 
what  economic  system  we  have  to  live. 


CHAPTER   III 

THE    ESSENTIALS    OF    PRODUCTION 

It  has  been  shown  that  under  the  competi 
tion  which  is,  or  has  been,  the  corner-stone  of 
Capitalism,  the  value  or  price  of  articles  sold  is 
finally  decided  by  the  consumer.  (Whether 
Capitalism  is  committing  suicide  by  destroy- 
ing competition  is  a  point  that  will  have 
to  be  discussed  later.)  But  the  price  obtained 
has  to  be  shared  among  several  parties  who, 
under  modern  conditions,  work  together  on 
the  process  of  production.  And  so  before  we 
proceed  to  consider  in  greater  detail  the  case 
for  Capitalism  as  compared  with  its  suggested 
rivals,  it  is  better  for  us  to  arrive  at  an  under- 
standing of  the  essential  articles  and  qualities 
which  are  required  for  production,  and  have  to 
be  paid  for,  under  whatever  system  production 
is  carried  on.  These  may  be  tabulated  as 
follows : — 

1.  Strength  and  skill. 

2.  Tools,  material  and  time. 

44 


ESSENTIALS    OF    PRODUCTION    45 

3.  Management. 

4.  Readiness  to  face  failure. 
Concerning  No.  i  there  is  no  need  to  waste 

many  words.  Under  the  curse  of  Adam,  a 
certain  amount  of  toil,  involving  physical 
strength  and  aptitude  for  the  task  in  hand,  is 
involved  continually  in  mankind's  effort  to 
improve  the  productive  powers  of  nature  by 
working  on  them.  As  mankind  improves  the 
machinery  and  equipment  which  it  brings  to 
bear  upon  this  problem,  the  need  for  physical 
strength  is  lessened,  and  the  need  for  skill  is 
varied.  Less  cra.cs  mship  is  required  now  in 
making  a  pair  of  boots  than  was  the  case  three 
centuries  ago,  but  more  mechanical  skill  is 
needed  in  the  management  and  application  of 
machinery. 

Under  our  second  heading — Tools,  Material 
and  Time-»— very  important  considerations  are 
included.  The  word  tools  is  used  in  the  widest 
sense  of  the  word,  implying  not  only  all  forms 
of  machinery,  but  the  factories  in  which  they 
are  set  to  work,  and  the  ships,  railways,  wagons 
and  other  equipment  of  transport  by  which  the 
raw  material  is  brought  from  the  place  where  it 
is  grown  or  produced,  and  the  finished  product 
is  carried  to  the  consumer.  These  tools  have 
not  only  to  be  provided  in  order  that  industry 


46    THE   CASE    FOR   CAPITALISM 

may  start,  but  also  to  be  maintained  in  working- 
order,  and  provision  has  to  be  made  for  their 
renewal  when  they  are  worn  out  or  superseded 
by  a  new  invention.  Time  is  also  a  highly 
important  element,  because  this  need  for  time 
is  one  of  the  most  striking  requirements  which 
mark  the  work  of  man  as  an  industrial  animal. 
The  wild  beast  gets  its  food  and  eats  it.  In 
providing  its  material  needs,  it  makes  no  altera- 
tion in  the  stuff  which  nature  or  its  hunting 
skill  provides,  but  consumes  it  then  and  there. 
It  may  watch  for  days  for  its  prey,  but  having 
caught  its  hare  it  confines  its  further  efforts  to 
eating  and  digesting  it.  Man  takes  the  goods 
which  nature  provides,  and  subjects  them  to  an 
elaborate  and  often  very  lengthy  process  before 
he  has  changed  them  into  articles  which  he 
regards  as  desirable  for  consumption.  He 
builds  ships  that  sail  the  seas  for  years,  and 
railways  that  may  last  for  centuries,  to  carry 
materials  and  goods  from  place  to  place. 
Nearly  everything  that  we  consume  is  provided 
for  us  and  despatched  to  us  with  the  help  of 
work  that  has  been  done  long  ago,  perhaps 
before  we  were  born.  There  is  then  the 
necessity  that  during  the  process  of  production 
those  who  are  at  work  on  it  should  be  fed, 
clothed,  housed  and  otherwise  provided  for  out 


ESSENTIALS    OF    PRODUCTION    47 

of  some  accumulated  store  ;  because  the  work 
that  they  are  actually  doing  is  not  yet  turning 
out  an  article  ready  for  consumption,  and  may 
only  be  producing  articles,  such  as  machinery 
or  ships,  that  will  not  be  consumed,  in  the  ordi- 
nary sense  of  the  word,  but  used  in  the  processes 
of  further  production,  or  of  distribution. 

The  third  heading,  Management,  implies  the 
precious  quality  of  judgment  concerning  the 
purpose  for  which  the  machinery  of  production 
is  set  going,  the  organization  by  which  it  is 
made  most  efficient,  and  the  means  to  be  taken 
for  disposing  of  the  product  in  the  market  where 
it  is  most  wanted  and  will  fetch  the  best  price. 
In  the  complications  of  modern  industry,  this  is 
an  affair  requiring  the  highest  possible  skill  and 
foresight.  It  is  not  enough  to  set  a  large  num- 
ber of  people  to  work  to  produce  an  article  ;  the 
manager  or  designer  has  to  do  his  utmost  to  be 
sure  that  the  article  as  produced  will  be  such 
that  somebody  else  will  want,  and  also  to  see 
that  it  is  brought  within  the  reach  of  the  possible 
buyer.  If  it  is  not  wanted,  it  will  have  no 
economic  value,  because  nobody  will  give  goods 
and  services  in  exchange  for  it,  and  the  whole 
process  by  which  it  has  been  produced  will  have 
been  a  waste  of  labour,  materials  and  time.  If 
the  article  is  wanted,  but  those  who  want  it  do 


48     THE    CASE    FOR   CAPITALISM 

not  know  how  and  where  to  get  it,  the  same 
result  occurs  ;  and  under  modern  conditions  the 
selling  of  an  article  is  often  a  more  difficult  and 
costly  business  than  producing  it.  (See  The 
Laws  of  Supply  and  Demand ^  by  G.  B. 
Dibblee.) 

This  brings  us  to  our  fourth  heading — Readi- 
ness to  Face  Failure.  This  risk  of  failure  is 
clearly  involved  in  any  process  of  production  ; 
it  may  happen  either  because,  owing  to  faulty 
organization  or  lack  of  skill  in  applying  the 
tools  to  the  raw  material,  the  process  of  pro- 
ducing the  required  article  has  failed.  Again, 
it  may  happen  that,  though  on  the  mechanical 
side  the  process  has  been  entirely  successful, 
yet,  owing  to  a  change  in  demand  on  the  part 
of  consumers,  the  product  is  not  wanted.  Or 
a  miscalculation  concerning  the  cost  of  making, 
or  the  price  that  buyers  will  be  prepared  to  pay, 
may  make  the  whole  work  unprofitable,  because 
the  article  cannot  be  sold  to  the  consuming 
public  at  a  price  which  will  repay  the  efforts  of 
those  who  have  put  their  work  into  its  pro- 
duction. 

Under  whatever  system  production  is  carried 
on,  these  items  in  the  bill  have  to  be  met  in 
one  form  or  another. 

Under    our    present    organization,     No.    i. 


ESSENTIALS   OF    PRODUCTION   49 

Strength  and  Skill,  are  provided  by  labour  in 
return  for  wages.  One  of  the  most  hopeful 
signs  of  the  soundness  of  present  public  feel- 
ing, in  spite  of  hysterical  symptoms  on  the 
surface,  is  the  general  recognition  that  hitherto 
— before  the  war — the  wages  of  labour  were  on 
the  whole  inadequate  and  that  there  can  and 
should  be  no  return  to  the  pre-war  level.  The 
question  of  the  claims  of  the  wage-earner  will 
be  dealt  with  in  a  chapter  to  itself 

No.  2,  Tools,  Material  and  Time,  are  pro- 
vided by  capitalists  in  return  for  interest. 

No.  3,  Management,  by  organizers  and 
managers  in  return  for  salaries  ;  and 

No.  4,  Readiness  to  Face  Failure,  by  capita- 
lists of  a  venturesome  type,  adventurers  and 
ordinary  shareholders,  in  return  for  profits  and 
dividends. 

Labour  and  management  are  paid  first  ;  then 
capital  takes  interest ;  then  the  ordinary  share- 
holder or  whoever  divides  the  balance  takes 
what  is  left,  if  any,  or  goes  without  profit  if  the 
enterprise  fails. 

Payment  for  all  four  is  provided  by  the  con- 
sumer, if  he  consumes.  If  he  does  not,  and 
failure  is  so  complete  that  not  even  wages  of 
labour  and  salary  of  management  are  provided 
by    sales    of   the   goods    produced,    then    the 


50    THE   CASE    FOR   CAPITALISM 

adventurer  or  shareholder  has  to  make  this 
gap  good  besides  losing  all  his  profit.  The 
providers  of  Nos.  2,  3  and  4  shade  into  one 
another,  and  are  often  lumped  together  as 
capitalists.  It  may  sometimes  happen  that 
they  are  all  provided  by  the  same  person, 
who  puts  capital  into  a  business  by  owning  the 
factory,  machinery  and  tools  required  for  pro- 
ducing the  necessary  article,  organizes  and 
manages  the  industry,  sees  to  the  selling  of  the 
product,  advances  the  money  out  of  which  the 
wage-earners  are  paid  during  the  process  of 
production,  and  takes  upon  himself  the  risk  of 
the  whole  loss,  in  case  of  mistake  or  miscalcu- 
lation, claiming  in  return  for  this  risk  the 
whole  profit,  if  any,  that  is  left  over,  after 
paying  for  the  raw  material,  providing  for  the 
depreciation  of  tools  and  machinery,  and  pay- 
ing the  wages  of  those  who  work  for  him. 
Nevertheless  though  these  things  may  all  be 
done  by  one  individual,  the  earnings  that  he 
finally  puts  into  his  pocket,  if  any,  are  still 
derived  from  three  different  sources,  that  is  to 
say,  interest  on  capital,  salary  for  his  work  as 
organiser,  and  profit  as  reward  for  the  risk 
which  he  has  run. 

It  is  very  necessary  to  get  these  distinctions 
clear,  because  a  great  deal  of  fallacious  theory 


ESSENTIALS   OF   PRODUCTION    51 

has  been  based  upon  the  assumption  that 
capital  and  labour  are  the  only  essentials 
required  in  production.  Labour  is  frequently 
used  in  different  senses,  according  to  the 
confused  and  confusing  habit  of  economists 
of  using  the  same  word  in  different  meanings 
in  different  parts  of  their  work.  Adam  Smith 
apparently  used  it  as  covering  all  the 
activities  of  mind  and  body  required  for 
production.  In  this  sense  it  covers,  of 
course,  the  work  of  the  unskilled  labourer, 
the  skill  of  the  skilled  labourer,  and  the 
organizing  capacity  of  the  manager.  In 
these  days  when  people  talk  of  labour  they 
more  commonly  mean  the  labour  of  the  weekly 
wage-earners,  skilled  and  unskilled,  applied  to 
production.  In  this  meaning  of  the  word  the 
claim  that  is  often  made  that  labour  is  entitled 
to  the  whole  of  its  product  is  clearly  an  ab- 
surdity, if  it  means  that  manual  labour  can  by 
itself  be  considered  responsible  for  the  whole 
of  an  article  produced  under  modern  conditions. 
If  it  only  means  that  labour  is  entitled  to  all 
that  it,  by  itself,  produces,  then,  as  we  shall 
find  later,  labour  gets  all  this  and  a  great  deal 
more. 

Capital   we  had  to   divide  into   two  classes 
according    to    the    extent    of    the    risk    that 


52     THE   CASE    FOR   CAPITALISM 

it  takes.  In  fact  a  certain  amount  of  risk 
is  involved  by  every  investment  in  industry. 
But  the  risk  may  be  reduced  to  a  negligible 
minimum,  in  the  case  of  a  first  charge 
on  the  earnings  of  a  great  railway  company, 
and  may  range  up  to  a  level  requiring  a 
great  deal  of  speculative  .  courage,  or 
recklessness,  in  facing  it,  as  in  the  case 
of  the  shares  in  a  mining  company  or  in  a 
company  formed  to  work  a  new  patent  or  an 
untried  industry.  Capitalism  has  ingeniously 
provided  different  kinds  of  securities  to  suit 
the  taste  of  investors  and  speculators.  For 
those  who  want  security  chiefly  it  gives  what 
are  called  mortgage  bonds  and  debentures, 
investors  in  which  are  not  shareholders  in,  but 
creditors  of,  the  company  which  issues  them. 
In  this  case,  if  the  company  is  prosperous  and 
sound  the  risk  attached  is  almost  nil  and  the 
rate  of  interest  is  accordingly  low.  Preference 
securities  are  a  compromise,  ranking  behind 
the  creditors  and  before  the  ordinary  share- 
holders, who  usually  come  last  and  take 
whatever  profit  is  left  after  all  claims  on  the 
company  have  been  met,  or  pocket  the  loss  of 
their  profit  and  their  capital  if  the  company 
is  a  failure.  They  are  thus  adventurers  and 
speculators,  risking  what  they  put  into  industry 


ESSENTIALS    OF    PRODUCTION    53 

on    the    chance    of    a    fat    reward    in    case   of 
success. 

It  has  been  wittily  said  that  the  speculative 
investor  dines  well  but  sleeps  badly,  while  the 
prudent  investor,  who   takes  low  interest  and 
little   risk,    sleeps    well    but  dines    badly.       If 
there   were  not  plenty  of  people  prepared  to 
take  speculative  risks,  industrial  progress  would 
be  impossible  because  no  new  venture  could  be 
tried.     Capitalism  is  sometimes    criticized    be- 
cause of  its  long  tale  of  unsuccessful  ventures. 
If  their  failure  is  due,  as  it  often  is,  to  swindling 
or  recklessness,  the  criticism  is  sound.     But  in 
so  far  as  it  is  due  to  genuine  attempts  at  new 
ventures  that  fail,  this  failure  is  the  price  that 
is  paid  for   progress.      Under  Capitalism   this 
price    is    paid    by    speculators.       Under     the 
various  suggested  forms  of  Socialism  it  would 
have  to  be  paid  by  the  community,  and  there 
is  consequently  some  danger  that  it  would   not 
be  paid  readily,  and  that  therefore  there  would 
be  little  progress ;    because  officials,    with    no 
incentive  in  the  shape   of  profit  before   them, 
would  be  very  shy  about  embarking  the  labour 
of  the  community,   or  of   Guilds,  in   ventures 
whose  failure  would  involve  them  in  blame. 

After  what  has  been  said  above  about  the 
difficult  task  of  the  manager  there  is  no  need 


54    THE   CASE    FOR   CAPITALISM 

to  insist  on  the  necessity  for  paying  for  his 
services.  Business  men  continually  complain 
nowadays  of  the  difficulty  of  finding  men  with 
initiative  and  readiness  to  take  responsibility. 
Under  any  system  this  need  to  reward  good 
management  would  have  to  be  met,  or  the  com- 
munity which  failed  to  meet  it  would  very  soon 
find  that  it  had  perpetrated  a  bad  economy. 

Whatever  analysis  one  adopts  in  trying  to 
arrive  at  all  the  factors  which  have  to  be  put 
into  an  article  of  modern  consumption,  it  is 
always  impossible  to  avoid  a  certain  amount 
of  confusion,  owing  to  the  complications  which 
make  one  item  shade  into  another.  Perhaps 
we  shall  get  a  clearer  vision  of  the  matter  if 
we  imagine  what  might  have  been  possible 
under  primitive  conditions  of  production,  with 
one  single  individual  providing  or  undertaking 
all  the  four  essentials  that  have  been  enumer- 
ated above,  and  also  being  himself  the  consumer 
of  the  product  when  turned  out. 

In  other  words,  we  have  to  go  back  to 
Robinson  Crusoe,  and  though  there  are  very 
sound  objections  to  what  is  called  Crusoe 
economics,  it  does  seem  to  be  possible  to  get 
some  clearness  in  that  way  before  the  problem 
is  complicated  by  a  considerable  number  of 
people  being  involved  in  the  difficult  question 


ESSENTIALS   OF    PRODUCTION    55 

of  sharing  the  product  or  its  price  when  pro- 
duced.   We  can  then  imagine  Robinson  Crusoe 
on  his  island  fishing  off  the  rocks  with  a  string 
and  a  hook  and  a  bait,  with  more  or  less  suc- 
cess, for  the   fish   which   come   inshore.      He 
then  comes  to  the  conclusion   that  it  will  be 
worth  while   for   him,    in  order   to   fish   more 
easily  and  quickly,  to  build  himself  a  boat ;  but 
first  of  all  he  has  to  consider  whether  the  work 
which  he  will  put  into  making  the  boat  might 
not  be  better  applied  to  tilling  his  land,  and 
so  improving  its  output  of  cereals,  or  into  im- 
proving  his   bows   and   arrows,   or   any  other 
weapons  with  which  he  goes  hunting,  or  whether 
it  would    not  on  the  whole    be  better  to  con- 
tinue to  go  on  as  he  is,  and  trust  to  the  variation 
of  his  diet  by  the  simple  method  of  fishing  off 
the  rocks   as  he   has  done  before.      In  other 
words,  he   has  to  consider  whether  the    time 
and  work  that   he    is   going   to   put  into    the 
project  will  repay  him,  whether  the  boat  which 
he  is  going  to  try  to  build  is  likely  to  be  sea- 
worthy, and  whether  it  will  really  be  true  that 
by  going  a  little  further  away  from  the  shore 
he  will  be  able  to  increase  materially  his  power 
to  catch  fish. 

If  he  decides  that  on  the  whole  it  is  worth 
while  to  carry  out  his  design,  he  will  have  to 


56     THE    CASE    FOR   CAPITALISM 

make  himself  the  best  apology  he  can  for  the 
necessary  tools,  put  his  boat  together  out  of 
the  rough  planks  which  he  is  able  to  fashion, 
get  his  boat  into  the  sea,  himself  into  the  boat, 
do  his  fishing  and  bring  the  fish  home  and  eat 
them.  He  will  then  have  applied  strength  and 
skill,  will  have  got  the  raw  material,  made  his 
tools,  and  given  up  his  time  during  the  passing 
of  which  he  will  have  to  be  feeding  himself  out 
of  accumulated  stores  of  food.  He  will  have 
taken  the  risk  of  the  boat  being  unseaworthy, 
and  of  the  fish  being  no  more  amenable  a  little 
way  out  from  the  shore,  and  of  their  being  less 
pleasant  to  eat  than  those  which  he  caught 
inshore.  When  a  man  is  thus  working  on  his 
own  account,  he  is  as  near  economic  freedom 
as  any  one  can  expect  to  be  in  this  world,  who 
has  not  a  store  of  accumulated  capital  to  live 
on.  He  would  only  have  to  consider  his  own 
tastes  and  his  own  inclinations  in  organizing 
his  economic  activities ;  and  yet  we  find  that 
even  in  these  circumstances,  he  is  not  able  to 
free  himself  from  any  of  the  complications  of 
production  that  have  been  enumerated  above. 

Although  he  knew  when  he  started  out  on 
this  project  for  improving  his  supply  of  fish 
that  his  desire  for  this  form  of  diet  was  suffi- 
ciently strong  to  make  him  do  the  work  and 


ESSENTIALS   OF   PRODUCTION    57 

give  the  necessary  time,  it  is  still  possible  that 
when  he  has  done  it,  some  change  in  the  con- 
dition of  his  gastric  juices,  or  perhaps  the 
chance  discovery  of  a  pleasant  fruit  that  he 
finds  growing  freely  on  the  island,  might  make 
him  much  less  eager  for  fish  than  he  was,  and 
may  thus  induce  him  to  leave  the  boat  to  rot 
which  he  had  so  painfully  produced  at  the 
expense  of  his  leisure,  or  of  economic  activity, 
which  he  might  have  put  into  other  enter- 
prises. Thus  even  though  the  whole  project 
as  he  thought  it  out  was  perfectly  sound  from 
his  point  of  view,  yet  even  the  economic  Crusoe, 
working  with  no  one's  feelings  to  consider  but 
his  own,  cannot  free  himself  from  the  possi- 
bility of  failure,  owing  to  a  miscalculation  of  his 
own  market.  Complete  freedom  in  an  economic 
sense  is  in  fact  very  rarely  obtainable  for  any 
individual,  with  the  exception,  as  we  shall  see, 
of  the  modern  capitalist  under  certain  unusua' 
circumstances. 

It  is  important  that  these  truisms  should  be 
borne  in  mind,  because  there  is  a  tendency  in 
these  times  to  blame  the  framework  of  society 
as  it  is  at  present  constructed,  for  the  lack  of 
economic  freedom  enjoyed  by  the  vast  majority 
of  its  members.  Crusoe's  case  has  shown  us 
that  under  what  are  called  natural  conditicms, 


58     THE    CASE    FOR   CAPITALISM 

economic  freedom  is  almost  impossible.    Except 
in  climates  where  food  is  provided  by  nature 
and  clothes  and  shelter  are  unnecessary,  a  man 
must  work  to   live.      A  great  deal  of  bitter- 
ness between  one  class  and  another  has  been 
caused    by    the    frequent   use   of    the    phrase 
"wage  slaves,"  as  describing   the  position  of 
the    manual    workers    who    work    for    weekly 
wages.      The  wage   slave   in  fact  works   side 
by  side  with  the   salaried  slave,  who  depends 
upon  his  employers,  and  finally  upon  the  public, 
for  earning    his  salary,  the  professional  slave, 
who  depends  on  his  patients  or  his  pupils  or 
his  clients  for  his  fees,  and  the  interest  slave, 
who  depends  on  those  who  make  use  of  the 
capital  which  he  advances  to  industry  for  the 
earning  of*  the  interest  on  which  he  lives,  and 
v/ith  the  profit  slave,  who  depends  more  pre- 
cariously than  any  of  them  on  the  success  of 
the  project  which  he  has  financed,  in  earning 
from  the  public  a  price  which  will  satisfy  all 
the  charges  which  have  been  put  into  produc- 
ing it,  and  leave  something  over  for  him  who 
takes  the  balance. 

Among  these  various  classes  of  "  slaves," 
the  least  risk  is  taken  by  the  capitalist  pure 
and  simple — that  is  to  say,  by  the  investor 
who  confines  himself  in  his  choice  of  invest- 


ESSENTIALS   OF    PRODUCTION    59 

ments    to   debentures    and    other   first-charge 
investments.     If  he  is  careful  enough,  he  may 
for   all   practical    purposes    eliminate    all    risk 
from   his  investments,  and   so  secure   himself 
complete  economic  freedom,  subject  always  to 
any  violent  change  in  the  constitution  of  the 
economic  society  which  might  deprive  him  of 
all   his   property,  and   of  all   claim    upon    the 
industry  which  he  has  helped  to  create.     Apart 
from  this  risk,  we  may  say  that  the  capitalist 
who  is  really  cautious  and  careful  in  his  selec- 
tion of  investments  in  industry  from  the  point 
of  view  of  security   alone,  and   gives   up   all 
thought  of  any  share  in  any  extra  prosperity 
in   the    business,  may  come   as    near  as   pos- 
sible to  securing  economic  freedom.     But  this 
freedom  would   only   be   attained    by   earning 
a   comparatively   low  rate   of  interest   on    his 
capital,  and  he  would  still  be  liable  to  consider- 
able variations  in  the  actual    buying-power  of 
his    income,    owing    to    changes    that    might 
happen  to  the   general  level  of  prices  owing 
to   currency  arrangements  or  failures   in    pro- 
duction.     In  fact,  the  experience  of  the  War 
has  shown  how  great  is  the  risk  to  which  even 
the  "gilt-edged"  investor  is  exposed.     For  it 
is  those  who  had  to  live  on  fixed  incomes,  who 
have  suffered  most  severely  from  the  rise  in 


6o     THE    CASE    FOR   CAPITALISM 

the  prices  of  all  that  they  had  to  buy,  the  great 
increase  in  direct  taxation,  and  the  great  fall 
in  the  market  value  of  their  securities.  But 
the  question  of  the  capitalist's  claim  to  the 
limited  but  substantial  economic  freedom  that 
is  his,  is  big  enough  for  a  chapter  to  itself. 


CHAPTER   IV 

THE    CAPITALIST    THIEF 

In  the  last  chapter  we  saw  that  many  essen- 
tials to  production  have  to  be  provided  under 
whatever  system  production  is  carried  on. 
Among  these  were  raw  materials,  machinery, 
equipment  of  all  kinds,  a  factory  and  a  place 
to  carry  the  work  out,  railways,  ships,  etc.,  to 
carry  the  product  to  market,  the  food  and  sub- 
sistence of  the  workers  during  the  time  that 
elapses  between  the  beginning  of  production 
and  the  sale  of  the  product,  and  finally  pro- 
vision against  the  risk  that  the  product  when 
finished  may  not  suit  the  views  of  the  consumers 
who  are  asked  to  buy  it.  These  essentials  are 
provided  by  capital.  Somebody  with  money 
in  his  pocket  buys  these  things  for  industry 
instead  of  spending  it  on  himself  Thus  at 
first  sight  he  seems  fully  to  earn  the  interest 
and  profit  with  which  he  is  rewarded  if,  and 
only  if,  the  services  that  he  and  his  manager 

6i 


62     THE   CASE    FOR  CAPITALISM 

render  suit  the  views  of  the  consuming  pubh'c. 
It  is  therefore  rather  starth'ng  to  find  a  con- 
siderable school  of  thought  which  appears  to 
regard  the  capitalist  as  a  thief,  and  the  capitalist 
system  as  one  of  organized  robbery. 

In  a  book  in  favour  of  National  Guilds  called 
Self-Government  in  Industry^  on  page  235,  Mr. 
G.  D.  K.  Cole  remarks  :  "  To  do  good  work 
for  a  capitalist  employer  is  merely,  if  we  view 
the  situation  rationally,  to  help  a  thief  to  steal 
more  successfully."  Other  Guild  champions 
are  equally  explicit.  Messrs.  Reckitt  and 
Bechhofer  in  The  Meaning  of  National  Guilds 
allude  to  the  "felony  of  Capitalism"  as  if  it 
were  a  self-evident  truism. 

Mr.  Cole  is  no  street-corner  spouter,  but  a 
cultured  and  highly-educated  writer,  and  some 
time  a  Fellow  of  Magdalen  College,  Oxford. 
When  such  a  man  calmly  assumes  without 
attempting  to  argue  the  point  that  the  capitalist 
is  a  thief,  it  is  inevitable  that  many  honest 
people  who  live  on  the  interest  of  capital, 
without  dreaming  that  they  are  doing  anything 
wicked  or  dishonest,  should  feel  themselves 
pulled  up  short  by  the  question — Are  we  really 
thieves  and  parasites  living  on  the  labour  of 
society  without  any  right  to  the  enjoyment 
of  goods  which  we  are  consuming,  and,  if  so, 


THE    CAPITALIST   THIEF        63 

what  ought  we  to  do  ?     Let  us  look  into  this 
question. 

Capital  is  usually  described  by  economists 
as  wealth  devoted  to  production,  that  is  to  say, 
it  consists  of  goods  which  are  used  not  for 
immediate  consumption,  but  in  order  to  increase 
the  productive  power  of  the  community  and  to 
earn  interest  or  profit  for  those  who  own  the 
capital.  If  a  man  earning  ;!^  1,000  a  year  puts 
the  whole  of  it  into  providing  himself  with 
comforts  and  luxuries  which  his  income  enables 
him  to  enjoy,  he  does  not  increase  his  own 
capital,  or  the  productive  power  of  the  com- 
munity. If  he  puts  aside  /^200  or  ;^300  a 
year  and  invests  it  in  industry,  it  means  to- say 
that  his  wealth,  instead  of  being  immediately 
consumed  in  the  form  of  the  pleasures  of  foreign 
travel,  or  the  possession  of  a  motor-car,  or  a 
billiard-room,  or  a  lawn  tennis  court,  contributes 
to  the  erection  of  a  factory,  or  the  opening  up 
of  a  piece  of  land,  or  of  the  building  of  a  railway 
or  of  a  ship,  so  that  the  productive  power  of 
mankind  is  increased,  or  transport  facilities  are 
made  cheaper  and  better.  The  production  to 
which  this  saved  wealth  is  thus  applied  is 
expected  to  yield  a  revenue  to  those  who 
employ  it,  and  usually  does  so.  If  it  did  not, 
people  would  obviously  leave  off  this  applica- 


64     THE    CASE    FOR   CAPITALISM 

tion  of  wealth  to  the  furtherance  of  industry. 
But  when  there  is  a  faihjre  in  production  owing 
to  some  mishap  by  which  the  product  has  not 
turned  out  right,  or  does  not  suit  the  view  of 
the  consumers,  the  capital  is  lost  and  its  owner 
receives  no  reward  in  the  form  of  interest  or 
profit. 

Nowadays,  though  a  certain  amount  of 
capital  is  invested  by  its  owners  in  businesses 
which  they  themselves  conduct,  the  more  usual 
channels  in  which  capital  is  placed  are  invest- 
ments in  land  or  in  the  securities  of  Govern- 
ments and  Municipalities  or  of  Joint  Stock 
Companies  formed  to  carry  on  some  enterprise. 
The  income  received  by  the  capitalist  consists 
of  rent  when  the  capital  is  placed  in  land,  and 
of  interest  and  dividends  when  it  is  placed  in 
securities  of  Public  Bodies  or  of  Companies. 
The  question  then  which  we  have  to  consider 
is  this  :  Is  the  rent  and  interest  received  by 
capitalists  from  their  investment  in  land  and 
securities  a  form  of  robbery  by  which  they 
plunder  the  community? 

Let  us  take  the  question  of  rent  first,  though 
I  hope  to  show  that  the  difference  between 
rent  and  interest  is  one  of  degree  and  not  of 
essence — they  are  merely  different  forms  of 
payment  to  the  owners  of  property  for  the  use 


THE   CAPITALIST   THIEF        65 

of  it  by  those  who  need  it.  With  regard  to 
rent,  an  interesting  and  incisive  attack  on  it 
by  Mr.  Bernard  Shaw  is  to  be  found  in  the 
first  chapter  of  the  Fabian  Essays  on  Socialism. 
"Let  us,"  he  says,  "in  the  manner  of  the 
political  economist,  trace  the  effects  of  settling 
a  country  by  private  property  with  undisturbed 
law  and  order.  Figure  to  yourself  the  vast 
green  plain  of  a  country  virgin  to  the  spade, 
awaiting  the  advent  of  man.  Imagine  then 
the  arrival  of  the  first  colonist,  the  original 
Adam,  developed  by  centuries  of  civilization 
into  an  Adam  Smith,  prospecting  for  a  suitable 
patch  of  Private  Property.  Adam  is,  as  Political 
Economy  fundamentally  assumes  him  to  be, 
'  On  the  make  : '  therefore  he  drives  his  spade 
into,  and  sets  up  his  stockade  around,  the  most 
fertile  and  favourably-situated  patch  he  can 
find.  .  .  .  Other  Adams  come,  all  on  the  make, 
and  therefore  all  sure  to  pre-empt  patches  as 
near  as  may  be  to  the  first  Adam's,  partly 
because  he  has  chosen  the  best  situation, 
partly  for  the  pleasure  of  his  society  and  con- 
versation, and  partly  because  where  two  men 
are  assembled  together  there  is  a  two-man 
power  that  is  far  more  than  double  one-man 
power.  .  .  .  These  Adams,  too,  bring  their 
Cains    and    Abels,    who    do    not    murder   one 

E 


66     THE    CASE    FOR   CAPITALISM 

another,  but  merely  pre-empt  adjacent  patches," 
and  so  as  the  process  of  occupation  goes  on, 
and  as  new-comers  still  pour  into  the  land, 
"there  is  nothing  for  the  new-comer  to  pre- 
empt save  soil  of  the  second  quality.  Again, 
division  of  labour  sets  in  amongst  Adam's 
neighbours  ;  and  with  it,  of  course,  comes  the 
establishment  of  a  market  for  the  exchange  of 
the  products  of  their  divided  labour.  Now  it 
is  not  well  to  be  far  afield  from  that  market, 
because  distance  from  it  involves  cost  for  roads, 
beasts  of  burden,  time.  .  .  .  All  this  will  be 
saved  to  Adam  at  the  centre,  and  incurred 
by  the  new-comer  at  the  margin,"  and  so 
Mr.  Shaw  estimates  the  annual  value  of  Adam's 
produce  at  ;^i,ooo,  while  the  annual  produce 
of  the  new-comer  on  the  margin  is  ^500,  with 
equal  industry  on  the  part  of  Adam  and  the 
new-comers,  so  here  is  a  clear  advantage  of 
;^5oo  a  year  to  the  first  comer,  which  is 
economic  rent.  "The  two  men  labour  equally, 
and  yet  one  gets  ^^500  a  year  more  than  the 
other  through  the  superior  fertility  of  his  land 
and  convenience  of  its  situation.  .  .  .  Why 
should  not  Adam  let  his  patch  to  the  new- 
comer at  rent  of  ;i^500  a  year.-*  Since  the 
produce  will  be  ^1,000,  the  new-comer  will 
have  ^500  left  for  himself,  or  as  much  as  he 


THE   CAPITALIST   THIEF        67 

can  obtain  by  cultivating  a  patch  of  his  own  at 
the  margin  ;  and  it  is  pleasanter,  besides,  to  be 
in  the  centre  of  society  than  on  the  outskirts 
of  it.  The  new-comer  will  himself  propose  the 
arrangement ;  and  Adam  may  retire  as  an  idle 
landlord  with  a  perpetual  pension  of  ^1^500 
rent.  The  excess  of  fertility  in  Adam's  land  is 
thenceforth  recognized  as  rent,  and  paid,  as  it 
is  to-day,  regularly  by  a  worker  to  a  drone." 

Mr.  Shaw  proceeds  to  a  further  development 
as  inhabitants  pour  into  the  country  until  the 
outermost  belt  of  free  land  is  reached,  upon 
which  the  yield  to  a  man's  year's  labour  is 
only  ;^ioo.  "Clearly  now  the  rent  of  Adam's 
primeval  patch  has  risen  to  ;i^900,  since  that 
is  the  excess  of  its  produce  over  what  is  by 
this  time  all  that  is  to  be  had  rent-free.  But 
Adam  has  yielded  up  his  land  for  ;i^500  a  year 
to  a  tenant.  It  is  this  tenant  accordingly  who 
now  lets  Adam's  patch  for  ;!^900  a  year  to  the 
new-comer,  who,  of  course,  loses  nothing  by 
the  bargain,  since  it  leaves  him  the  /^loo  a. 
year  with  which  he  must  be  content,  anyhow. 
Accordingly  he  labours  on  Adam's  land ;  raises 
;^  1,000  a  year  from  it ;  keeps  ^iod  and  pays 
^900  to  Adam's  tenant,  who  pays  ^500  to 
Adam,  keeping  ^^400  for  himself,  and  thus  also 
becoming  an    idle   gentleman,   though   with    a 


68     THE    CASE    FOR   CAPITALISM 

somewhat  smaller  income  than  the  man  of  older 
family.  It  has,  in  fact,  come  to  this,  that  the 
private  property  in  Adam's  land  is  divided 
between  three  men,  the  first  doing  none  of  the 
work  and  getting  half  the  produce ;  the  second 
doing  none  of  the  work  and  getting  two-fifths 
of  the  produce,  and  the  third  doing  all  the  work 
and  getting  only  one-tenth  of  the  produce." 
And  then,  later,  when  the  land  is  all  filled  up, 
there  comes  in  a  still  further  supply  of  new- 
comers, "a  man  in  a  strange  plight — one  who 
wanders  from  snow-line  to  sea- coast  in  search 
of  land,  and  finds  nothing  that  is  not  the 
property  of  some  one  else  .  .  .  the  first  dis- 
inherited son  of  Adam,  .  .  .  who  is  himself 
for  the  moment  foodless,  homeless,  shiftless, 
superfluous  and  everything  that  turns  a  man 
into  a  tramp  or  a  thrall.  Yet  he  is  .  .  .  able  to 
deal  puissantly  with  land,  if  only  he  could  get 
access  to  it.  .  .  .  What  if  the  proletarian  can 
contrive — invent — anticipate  a  new  want — turn 
the  land  to  some  hitherto  undreamt-of  use — 
wrest  .i^i,500  a  year  from  the  soil  and  site  that 
only  yielded  ^i,ooo  before?  If  he  can  do 
this,  he  can  pay  the  full  ^i,ooo  rent  and  have 
an  income  of  ^500  left  for  himself.  This  is 
his  profit — the  rent  of  his  ability — the  excess 
of  its  produce  over  that  of  ordinary  stupidity." 


THE    CAPITALIST   THIEF        69 

But  there  also  come  other  proletarians  who 
are  no  cleverer  than  other  men,  who  do  as 
much  but  not  more  than  they.  In  the  mean- 
time, owing  to  division  of  labour,  the  use  of 
tools  and  money  and  the  economies  of  civiliza- 
tion, man's  power  of  extracting^  wealth  from 
Nature  is  greatly  increased,  so  that  the  produce 
of  land  on  the  margin  of  cultivation  may  rise 
considerably  ;  if  we  suppose  the  yield  to  have 
doubled,  then  the  proletarian  who  is  not  clever 
"can  very  well  offer  to  cultivate  the  land, 
subject  to  a  payment  of,  for  instance,  /^  1,600 
a  year,  leaving  himself  ;^400  a  year.  This  will 
enable  the  last  holder  of  the  tenant  right  to 
retire  as  an  idle  gentleman,  receiving  a  net 
income  of  ;[^7CX)  a  year,  and  a  gross  income  of 
jC 1, 600,  out  of  which  he  pays  ^QCX)  a  year  rent 
to  a  landlord,  who  again  pays  to  the  head 
landlord  ;^500." 

This  picture,  so  brilliantly  drawn  by  Mr. 
Shaw,  is,  of  course,  largely  fanciful.  In  the 
first  place,  he  begins  by  assuming,  as  quoted 
above,  a  country  with  undisturbed  law  and 
order,  and  a  vast  green  plain  virgin  to  the 
spade  waiting  the  advent  of  man.  But  in  fact 
countries  are  very  seldom  found  under  these 
comfortable  conditions.  They  are  much  more 
likely  to  be  found  in  the  possession  of  savage 


70     THE    CASE    FOR   CAPITALISM 

owners  who  very  strongly  object  to  the  presence 
of  the  gentleman  who  comes  in  with  a  spade 
and  proposes  to  till  them.  They  are  also  very 
likely  to  be  tenanted  by  more  or  less  unplea- 
sant wild  beasts,  snakes  and  other  such  fauna, 
while  they  are  also  likely  to  be  encumbered 
with  thick  forests  which  have  to  be  cleared 
before  tillage  is  possible.  Such  are  the  dangers 
which  the  original  pioneer  has,  as  a  matter  of 
fact,  in  most  cases  to  face  ;  but  even  if  we 
follow  Mr.  Shaw's  example,  and  leave  all  these 
unpleasantnesses  out  of  account,  the  fact  remains 
that  the  Adam  who  settles  down  on  the  best 
patch  in  the  country  is  the  pioneer  who  leads 
the  way  into  the  wilderness,  forsaking  the 
pleasant  companionship  of  man.  In  Mr.  Shaw's 
example,  his  arrival  is  followed  by  a  large 
number  of  other  people  who  very  quickly 
cure  this  defect  in  his  surroundings,  but  this 
by  no  means  always  happens,  and  it  is  quite 
possible  that  the  original  pioneer  is  either  killed 
with  or  without  torture  by  the  natives  who 
resent  his  intrusion,  or  is  eaten  by  wild  beasts, 
or,  after  years  of  struggle  with  the  natural 
difficulties  of  his  position,  dies  of  starvation 
owing  to  the  failure  of  his  crops.  If,  on  the 
contrary,  things  turn  out  as  Mr.  Shaw  describes 
them,  the  fortunate  prospector  who  has  by  a 


THE   CAPITALIST   THIEF        y\ 

stroke  of  luck,  which  is  probably  rare  in  actual 
life,  found  the  very  best  piece  of  land  in  the 
country  for  his  original  occupation,  reaps  a 
reward  from  his  judgment  and  the  success  with 
which  he  has  overcome  natural  difficulties  and 
the  sacrifices  which  he  has  made  in  facing  the 
dangers  and  hardship  of  life  in  the  wilderness, 
far  from  the  pleasant  companionship  of  his 
fellows.  That  Mr.  Shaw's  figures  are  based 
rather  on  his  imagination  than  on  the  facts 
which  usually  rule  in  a  work-a-day  world  is  a 
minor  detail.  It  does  not  often,  I  imagine, 
happen  that  a  tenant  who  is  making  ^loo  of 
actual  profit,  is  paying  an  annual  rent  of  ;^900. 
Enough  has  been  said  to  show  that,  even  if 
all  were  as  Mr.  Shaw  has  described  it,  the 
owner  of  the  fortunately-situated  central  patch 
has  done  something  to  earn  the  rent  which  he 
derives  from  it,  and  so  can  hardly  be  classed 
as  a  parasite  feeding  on  society,  and  giving 
nothing  in  return  for  the  goods  which  he  en- 
joys. And  those  who  came  after  him  and 
shared  his  fortune  were  also  pioneers  and 
adventurers  who  made  a  sacrifice  and  took  a 
risk.  If  such  men  must  be  dubbed  thieves, 
thieves  are  people  who  are  wanted.  A  year 
or  two  of  pioneering  in  a  wilderness  might  alter 
Mr.  Shaw's  view  surprisingly. 


72     THE   CASE    FOR  CAPITALISM 

Mr.  Ramsay  Macdonald  in  his  very  interest- 
ing  little   book  on    The  Socialistic  Movement, 
one  of  the  volumes  of  the   Home  University 
Library,  gives  another  version  of  this  criticism 
of  rent  as  a  charge  on  industry.      On  page  56, 
"Income  from  land,"  he  says,   "is  not  of  the 
nature   of    reward    for    services   rendered.     It 
used  to  be.     Land  was  granted  by  the  sove- 
reign to  his  captains  who,   in  return  for  their 
possessions,    rendered    military  service   to   the 
state,  and  in  addition  paid  certain  taxes,  so  as 
to  provide  the  king — who  was  the  embodiment 
of  the  state — with  what  income  he  required." 
On   page   159    he  says  that  "the  type  of  un- 
earned income  is  rent.      The   Socialist  there- 
fore propose  to  tax  it,  and  when  he  is  told  that 
by  doing  so  he  is  differentiating  one  kind  of 
property  from  another,  he  replies  that  this  is 
so,  the  reason  being  that  land  is  differentiated 
from  every  other  kind  of  property  by  its  own 
nature.      The   aim    of   this    tax    is   to   secure 
the  economic  rent  for  the  state,  because  it  is 
the  state  that  creates  the  value  which  economic 
rent   represents."      This   is    the   argument   on 
which  those  depend  who  draw  this  difference 
between  rent  and  interest,  rent  being  in  their 
opinion  a  profit  which  is  made  by  the  State, 
and  ought  to  belong  to  the  State,  while  interest 


THE   CAPITALIST   THIEF        yz 

may  or  may  not  have  something  to  be  said  for 
it.  Their  argument,  if  I  understand  it  right, 
is  this,  that  rent  being  the  difference  in  pro- 
ductive power  between  one  piece  of  land  and 
another,  is  not  due  to  any  exertions  of  the 
owner  of  it,  apart  of  course  from  any  improve- 
ments which  the  owner  may  have  made,  in 
which  case  they  acknowledge  that  he  is  entitled 
to  interest  on  the  capital  which  he  has  put  into 
it.  Otherwise  it  is  simply  a  gift  of  nature  in 
the  greater  fertility  of  the  soil,  or  a  gift  from 
the  community  which  has  made  the  land  valu- 
able by  crowding  in  to  want  to  live  upon  it, 
or  by  establishing  markets  in  its  neighbour- 
hood, so  that  its  produce  is  more  cheaply  and 
profitably  sold.  In  other  words,  rent  is  a 
present  that  is  put  into  the  pocket  of  the  land- 
owner, by  the  needs  of  the  community,  and 
so  is  socially  created. 

But  is  it  not  true  that  nearly  all  wealth, 
including  even  the  wages  of  labour,  is  more 
or  less  socially  created,  and  is  not  this  distinc- 
tive attribute  of  the  rent  of  land  in  fact  shared 
by  most  of  the  payments  which  any  community 
makes  to  its  members  ?  It  may  be  quite  true 
that  certain  lucky  landlords  have  had  untold 
wealth  heaped  upon  them  by  being  fortunate 
possessors  of  pieces  of  ground  in   London  and 


74     THE   CASE    FOR   CAPITALISM 

Manhattan  Island.  In  other  words,  they  have 
grown  rich  because  there  was  a  community 
which  wanted  to  enjoy  and  make  use  of  a 
certain  article  of  which  they  were  possessed. 
But  is  not  this  also  true  in  a  greater  or  less 
degree  of  all  of  us  who  receive  payments  from 
our  fellows  in  respect  of  work  that  we  do,  or 
property  that  we  own  ?  Owners  of  railways 
would  certainly  have  built  them  in  vain  if  there 
had  not  been  a  community  to  travel  on  them 
and  to  send  goods  over  them.  The  barrister 
with  a  huge  practice  would  not  be  able  to  earn 
his  ^20,000  a  year  if  there  were  not  a  crowd 
of  litigants  with  money  to  spend  on  the  ex- 
pensive luxury  of  justice.  The  journalist  can 
only  earn  money  from  his  pen  if  society  has 
provided  him  with  readers  sufficiently  educated 
to  enjoy  his  views  on  current  events.  Even 
Mr.  Charlie  Chaplin  would  smile  in  vain  on 
a  desert  island.  The  wage-earner  only  gets 
his  wages  because  there  are  employers  who 
set  him  to  work  and  consumers  to  absorb  the 
product  which  his   labour  helps  to  produce. 

Any  of  us  who  criticizes  any  one  else  for  the 
enjoyment  of  socially  created  wealth  may  easily 
cure  himself  of  the  vice  of  envy  by  wondering 
how  much  of  the  good  things  of  the  earth  he 
could  have  himself  enjoyed  if  he  had  been  put 


THE    CAPITALIST   THIEF        75 

down  by  himself  in  a  wilderness,  with  no  society 
to  create  wealth  for  him.  Nearly  all  wealth  is 
in  fact  more  or  less  socially  created,  just  as  it 
may  also  be  said  that  most  forms  of  human 
society  are  to  a  great  extent  created  by  wealth 
or  the  desire  to  possess  wealth.  It  is  in  fact, 
as  has  been  pointed  out  by  Locke  in  his  Essay 
on  Civilization,  for  the  purpose  of  the  mutual 
protection  of  their  lives  and  property  that 
men  originally  formed  themselves  into  civilized 
societies.^ 

Moreover,  it  will  be  noted  that  Mr.  Mac- 
donald  in  his  analysis  of  the  origin  of  rent, 
which  seems  to  be  much  closer  to  the  actual 
facts  of  the  case  than  the  sketch  produced  by 
Mr.  Shaw's  brilliant  imagination,  shows  that 
rent  was  originally  earned  by  captains  who 
were  settled  upon  the  land  in  return  for  military 
services.  According  to  him  therefore  the 
original  owners  of  land  received  it  in  return 
for  services  rendered  in  the  course  of  military 
occupation.  Modern  opinion  in  its  revolt 
against  views  which  we  now  stigmatize  as 
Prussianism  or  militarism  may  argue  that  thir 
would    not   now  be   regarded   as  an   equitable 

1  Cf.  Plato,  Republic,  Book  II,  "A  State  arises  out  of  the 
needs  of  mankind  ;  no  one  is  self-sufficing,  but  all  of  us  have 
many  wants." — (Jowett's  translation.) 


76     THE   CASE   FOR   CAPITALISM 

basis  of  possession.  But  we  have  no  right  to 
throw  back  our  modern  views  and  expect  people 
many  centuries  ago  to  act  in  accordance  with 
them.  If  it  can  be  shown  that  those  who 
originally  acquired  property  did  so  by  carrying 
out  what  was  then  considered  to  be  the  business 
and  duty  of  a  public-spirited  man,  then  they 
surely  earned  their  reward  according  to  the 
views  which  were  then  current.  It  may  be 
argued  that  when  feudal  tenure  ceased  and 
armies  were  raised  by  different  methods,  those 
who  had  held  the  land  as  a  reward  for  military 
service  ought  to  have  been  made  to  surrender 
it  or  pay  rent  for  it  to  the  State.  But  in  fact 
all  these  arguments  and  imaginings  about  the 
origin  of  various  forms  of  property,  in  the  ages 
when  the  world  was  first  being  settled,  or 
conquered  by  invading  hordes  who  seized  the 
property  of  its  inhabitants,  are  to  a  great  extent 
irrelevant. 

If  land  were  still  in  the  hands  of  the  descend- 
ants of  the  original  pioneers,  or,  in  the  case 
of  England,  of  the  descendants  of  the  Norman 
captains  among  whom  William  the  Conqueror 
parcelled  out  the  land,  it  might  then  possibly 
be  worth  while  to  enquire,  in  the  light  of  equity, 
into  the  title-deeds  of  these  gentlemen.  But 
we  know  that  much  of  this  property  has  changed 


THE   CAPITALIST   THIEF        ^-j 

hands  since  they  got  it  and  is  now  in  the 
hands  of  people  who  have  invested  the  pro- 
ceeds of  their  labour  in  it,  and  is  in  fact  an 
ordinary  investment,  very  difficult  to  distinguish 
from  an  investment  in  Government  securities 
or  those  of  industrial  Companies.  Even  in 
the  case  of  the  great  slices  of  English  territory, 
granted  ^by  King  Charles  the  Second  to  the 
mistresses  who  amused  his  leisure,  it  has  to 
be  remembered  that  these  fascinating  ladies 
rendered  a  service  in  their  time  of  a  kind 
which,  according  to  views  current  in  those 
days,  entitled  them  to  any  reward  that  the 
caprices  of  the  monarch  chose  to  shower  upon 
them. 

In  all  times,  and  still  at  the  present,  the 
ignorance  and  vice  of  the  community,  or  of 
those  members  of  it  who  happen  to  control 
claims  to  its  wealth,  have  showered  and 
continue  to  shower  wealth  upon  totally  un- 
worthy objects.  This  is  a  disease  which  can 
only  be  cured  by  the  education  of  the  community 
to  make  more  judicious  use  of  its  power  to 
decide,  by  the  choice  which  it  exercises  in 
consumption,  as  to  whom  it  shall  enrich.  We 
cannot  now  go  back  and  say  that  because 
society  in  the  Middle  Ages  or  at  the  time  of 
the    Restoration   gave    wealth    to   the    wrong 


78     THE   CASE    FOR   CAPITALISM 

people,  we  should  now  take  it  away  again  from 
their  representatives,  most  of  whom  have  paid 
for  it  with  money  earned  by  services  rendered. 
But  it  most  certainly  is  our  business  and  duty 
to  see  that  we  do  not  now  put  riches  into  the 
hands  of  those  who  pander  to  our  ignorance 
and  vice.  Are  we  putting  much  successful 
energy  into  this  duty  ? 

There  is  perhaps  some  difference  in  the 
power  which  investors  in  land  have  to  charge 
others  for  the  use  of  it  as  compared  with  that 
of  other  forms  of  property  from  which  interest 
and  profit  are  earned.  Competition  is  less 
free  and  multiplication  is  less  possible,  though 
as  the  rural  landowners  of  England  found  to 
their  cost  in  the  latter  half  of  the  nineteenth 
century,  the  development  of  transport,  by 
bringing  far-away  wildernesses  within  reach 
for  farming  purposes,  has  extended  the  com- 
peting area  enormously  and  will  do  so  in  future 
to  an  extent,  perhaps,  that  we  cannot  yet 
imagine.  Even  urban  land  is  not  quite  a 
monopoly.  Owners  of  sites  in  Mayfair  may 
seem  to  be  able  to  dictate  their  own  terms,  but 
there  is  a  point  at  which  the  community  will 
refuse  to  pay  their  price  and  go  to  other  abodes. 
Mr.  Ramsay  Macdonald,  in  the  book  already 
quoted  (page  58),  says  that  the  owner  of  land  is 


THE   CAPITALIST   THIEF        79 

"  in  the  position  of  a  man  who  holds  the  keys 
of  life,  and  he  consequently  can  exact  a  maxi- 
mum toll  as  his  price.  He  does  so."  Does 
he,  under  modern  conditions,  hold  the  keys 
of  life  any  more  than,  for  example,  the  coal- 
miner?  Does  not  competition  in  each  case, 
when  it  is  allowed  to  work,  come  to  the  rescue 
of  the  consumer  or  tenant  ?  If  all  the  land  were 
owned  by  one  owner  he  might  be  able  to  exact 
the  maximum  toll.  But  it  is  not  so,  and 
competition  between  its  owners  gives  a  chance 
to  those  who  want  to  hire  it.  And  yet  at  the 
bottom  of  the  matter  the  fact  that  land  was 
made  by  nature,  while  all  other  forms  of 
property  owe  something  to  man's  effort  in  their 
production  and  use,  makes  the  receivers  of  rent 
especially  liable  to  attack  when  the  rights  of 
property  are  in  question.  Rent  that  is  derived 
from  work  put  into  the  land  is  of  course  indis- 
tinguishable from  ordinary  interest  on  capital. 
But  when  it  is  paid  just  because  a  site  is  thought 
to  be  especially  desirable  by  the  community, 
or  because  somebody  else  has  built  a  railway 
through  it  or  near  it,  the  case  for  special 
taxation  of  the  increment  is  strong ;  though 
that  increment  differs  only  in  degree  from  the 
windfalls  which  are  given,  for  example,  to 
owners  of  stocks  of  black  dress  materials  when 


8o    THE   CASE    FOR  CAPITALISM 

the  Court   suddenly  and    hurriedly   goes   into 
mourning. 

If,  then,  even  the  capitalist  who  takes  his 
income  in  the  form  of  rent  has  a  good  deal  to 
say  for  himself  before  he  pleads  guilty  to  the 
charge  of  robbing  the  community,  the  capitalist 
who  earns  interest  and  profit  on  other  forms  of 
investment  has  a  still  stronger  case. 

"Incomes,"  says  Mr.  Ramsay  Macdonald 
(page  6i),  "derived  from  invested  capital  are 
not  so  easy  to  classify.  The  Ricardian  dictum 
that  all  wealth  is  created  by  labour  is  not 
exactly  true.  It  carries  one  much  further  than 
the  statement  which  is  true — that  no  wealth 
can  be  created  without  the  service  of  labour. 
But  there  is  much  wealth  which  labour  cannot 
create  without  the  aid  of  capital.  A  man  can 
go  into  the  forest  and  tear  boughs  off  trees  with 
his  hands  for  his  fires,  but  he  cannot  fell  trees 
without  an  axe  of  some  kind,  which  is  capital. 
Capital,  therefore,  has  its  value,  a  simple  fact 
which  means  that  under  the  freest  economic 
conditions,  interest  will  be  paid.  It  may  be 
interest  of  5  per  cent.,  it  may  be  of  a  tenth 
per  cent.,  but  the  utility  ot  capital  in  production 
will  always  have  an  appreciable  value  which 
the  labourer  who  uses  it  will  pay  without 
suffering  exploitation  or  injustice.     Interest  is 


THE   CAPITALIST    THIEF        8i 

therefore  not  of  the  nature  of  a  monopoly  toll. 
It  is  a  payment  for  service  rendered.  This  we 
may  call  pure  interest.  Risk  may  determine 
its  amount,  but  no  consideration  but  this  can 
justify  its  existence." 

Thus  the  troubled  capitalist  who  is  won- 
dering whether  he  is  really  a  thief  will  be 
relieved  to  find  that  he  is  acquitted  by  Mr. 
Ramsay  Macdonald,  a  keen  and  uncompromis- 
ing Socialist,  of  the  charge  made  against  him 
by  Mr.  Cole  and  the  other  Guildsmen.  On 
the  other  hand,  he  is  apparently  condemned 
by  Mr.  Bernard  Shaw  in  the  chapter  quoted 
above  from  the  Fabian  Essays.  "If,"  he  says, 
"a  railway  is  required,  all  that  is  necessary  is 
to  provide  subsistence  for  a  sufficient  number 
of  labourers  to  construct  it.  If,  for  example, 
the  railway  requires  the  labour  of  a  thousand 
men  for  five  years,  the  cost  to  the  proprietors 
of  the  site  is  the  subsistence  of  one  thousand 
men  for  five  years.  This  subsistence  is  techni- 
cally called  capital.  It  is  provided  for  by  the 
proprietors  not  consuming  the  whole  excess 
over  wages  of  the  produce  of  the  labour  of 
their  other  wage-workers,  but  setting  aside 
enough  for  the  subsistence  of  the  railway 
makers.  In  this  way  capital  can  claim  to  be 
the    result   of    saving,    or,    as    one    ingenious 


82     THE   CASE    FOR   CAPITALISM 

apologist  neatly  put  it,  the  reward  of  absti- 
nence— a  gleam  of  humour  which  still  enlivens 
treatises  on  capital.  The  savers,  it  need 
hardly  be  said,  are  those  who  have  more 
money  than  they  want  to  spend  ;  the  ab- 
stainers are  those  who  have  less.  At  the  end 
of  five  years  the  completed  railway  is  the 
property  of  the  capitalists,  and  the  railway 
makers  fall  back  into  the  labour  market  as  help- 
less as  they  were  before.  .  .  .  Colloquially,  one 
property  with  a  farm  on  it  is  said  to  be  land 
yielding  rent ;  whilst  another,  with  a  railway 
on  it,  is  called  capital  yielding  interest.  But 
economically  there  is  no  distinction  between 
them  when  they  once  become  sources  of 
revenue.  This  would  be  quite  clearly  seen 
if  costly  enterprises  like  a  railway  could  be 
undertaken  by  a  single  landlord  on  his  own 
land  out  of  his  own  surplus  wealth.  It  is  the 
necessity  of  combining  a  number  of  possessors 
of  surplus  wealth  .  .  .  that  modifies  the  term- 
inology and  external  aspect  of  the  exploitation. 
But  the  modification  is  not  an  alteration  ;  share- 
holder and  landlord  live  alike  on  the  produce 
extracted  from  their  property  by  the  labour  of 
the  proletariat." 

Again,  a  variation  on  the  same  theme  was 
produced  by  Ruskin  in  Fors  Clavigera,  when 


THE    CAPITALIST    THIEF        83 

he  quotes,  in  the  first  letter,  an  example  given 
in  a  Cambridge  Manual  of  Political  Economy 
of  a  carpenter  called  James  who  made  himself 
a  plane,  so  as  to  be  able  to  earn  more  from  his 
customers,  but  was  then  persuaded  by  a  friend, 
William,  to  lend  the  plane  to  him  for  a  year. 
William  promised  to  give  James  at  the  end 
of  the  year  a  new  plane  exactly  like  the  old 
one  (for  the  rather  surprising  reason  that  the 
plane  was  certain  to  be  worn  out  in  the  year), 
also  a  new  plank  as  a  compensation  for  the 
advantages  of  which  James  was  to  be  deprived, 
by  lending  the  plane  instead  of  using  it  in  his 
own  business.  "The  plane,"  says  Ruskin,  "is 
the  symbol  of  all  capital,  and  the  plank  is  the 
symbol  of  all  interest.  .  .  .  James  makes  a 
plane,  lends  it  to  William  on  ist  January  for 
a  year.  William  gives  him  a  plank  for  the  loan 
of  it,  wears  it  out,  and  makes  another  for  James, 
which  he  gives  him  on  31st  December.  On 
ist  January  he  again  borrows  the  new  one; 
and  the  arrangement  is  repeated  continuously." 
This  arrangement  he  holds  up  to  scorn  as 
being  entirely  unfair  to  William. 

How  will  the  ordinary  capitalist  feel  after  all 
this  dose  of  condemnation?  His  withers  will 
probably  be  unwrung.  He  will  see  that  in 
Mr.  Bernard  Shaw's  e.xample  the  people  who 


84     THE    CASE    FOR   CAPITALISM 

paid  workers  to  build  a  railway,  to  that  extent 
refrained  from  frivolous  and  luxurious  spend- 
ing, and  created  a  means  of  transport  which 
was  or  was  not  of  benefit  to  the  community. 
If  it  was  not,  the  community  would  not  travel 
on  it  and  they  would  lose  their  money.  If  it 
was,  the]!^  were  entitled  to  remuneration  for  the 
service  that  they  provided.  The  "labour  of 
the  proletariat,"  as  Mr.  Shaw  calls  it,  built  the 
railway,  under  the  direction  which  the  capital- 
ists provided  or  paid  for,  in  return  for  the 
pay  which  the  capitalists  put  into  their  hands. 
Were  they  thereby  "exploited"?  And  would 
the  manual  workers  have  been  as  well  off  as 
they  are,  if  no  capitalists  had  equipped  the 
world  with  railways  and  machinery  ? 

As  to  Ruskin's  example,  the  capitalist  will" 
see  that  the  lender  of  the  plane  did  the  bor- 
rower a  service  by  lending  him  a  tool  which 
would  help  him  in  his  work,  and  was  fully 
entitled  to  a  reward  in  the  shape  of  a  plank 
and  the  return  of  his  plane  or  its  replacement 
by  a  new  one  if  it  had  been  v/orn  out.  Did 
Ruskin  mean  that  he  should  have  given  the 
plane,  which  he  had  made  to  help  his  own 
work,  to  the  borrower  who  wanted  it  to  help 
his?  If  we  are  all  to  give  everything  to  every- 
body else,  it  will  be  a  very  nice  and  altruistic 


THE   CAPITALIST   THIEF        85 

state  of  affairs,  but  will  it  not  lead  to  industrial 
chaos  rather  than  progress  ?  Moreover,  if  the 
uncomfortable  capitalist  pursues  his  study  of 
Fors  Clavigera  he  will  find  on  a  later  page 
that  a  logical  but  not  too  tactful  correspondent 
wrote  and  asked  Ruskin  how,  with  his  views 
on  capital,  he  justified  his  own  action  in  living 
on  money  left  by  his  father,  and  that  Ruskin's 
reply  was  most  unconvincing  and  irrelevant. 
And  naturally,  for  though  the  capitalist  who 
is  such  by  reason  of  his  own  work  and  saving 
can  laugh  at  those  who  call  him  a  thief,  the 
inheritor  of  the  results  of  his  effort  is  not  in 
nearly  such  a  strong  position.  He  knows 
that  he  did  not  steal  his  immunity  from  the 
economic  problem  that  faces  most  of  us,  of 
working  or  else  suffering  penury,  because  it 
was  given  or  left  to  him  by  some  one  who 
earned  it.  But  he  may  well  ask  himself  whether 
it  is  equitable  that  such  a  great  advantage, 
involving  such  a  great  handicap  to  others, 
should  be  handed  on  from  one  generation  to 
another.  He  will  appease  himself  probably 
with  the  reflection  that  if  property  could  not 
be  passed  on  a  great  incentive  to  production 
and  progress  would  be  lost.  If  the  venturers 
and  organizers  could  not  hand  on  their  pro- 
perty   to    their    heirs    most    of    them    would, 


86     THE    CASE    FOR   CAPITALISM 

possibly  and  even  probably,  give  less  time  and 
energy  to  enterprise,  and  there  would  be  a  clog 
on  the  wheel  of  the  industrial  chariot.  But 
on  this  subject  there  has  in  the  last  few  years 
been  a  great  change  in  opinion,  and  I  lately 
heard  that  a  distinguished  American  banker 
had  expressed  a  doubt  as  to  whether  he  would 
be  wise  to  leave  his  children  with  more  than 
$5,000  a  year — a  quite  moderate  income  from 
an  American  point  of  view  in  these  days.  In 
any  case,  the  inheritor  may  also  remember  that 
the  State  shows  an  increasing  tendency  to  take 
toll  on  estates  passing  at  death,  and,  in  this 
country,  now  seizes  no  less  than  40  per  cent, 
of  the  largest  properties  when  their  owner  dies. 
As  long  as  it  does  not  check  enterprise  and 
the  accumulation  of  capital  this  determination 
of  the  State  seems  to  be  both  equitable  and 
expedient,  and  to  be  ii>  the  interest  even  of 
those  who  seem  to  suffer  by  it,  but  actually  are 
thereby,  and  to  that  extent,  compelled  to  justify 
their  existence  by  their  own  efforts  and  saved 
from  a  possible  life  of  idle  boredom. 

So  far,  then,  from  the  capitalist  being  a  thief, 
he  seems  to  render,  or  represent  some  one 
who  has  rendered,  a  service  to  the  commu- 
nity without  which  economic  progress  would 
be  impossible.      In  fact  we  may  say  that  any 


THE    CAPITALIST   THIEF        87 

one  who  is  able  to  be  a  capitalist,  by  spending 
something  on  the  equipment  of  industry,  and 
fails  to  do  so,  checks  the  clock  of  material 
progress.  If  we  are  going  to  throw  ugly  words 
like  "thief"  about,  we  should  with  more  justice 
throw  them  at  the  self-indulgent  spender  than 
at  the  capitalist  who  leaves  the  world  richer 
and  better  equipped  than  he  found  it. 


CHAPTER  V 

LABOUR    AND    ITS    PRODUCT 

We  have  seen  that  under  Capitalism  the 
course  of  production  and  the  question  of  the 
prices  at  which  goods  and  services  shall  be 
sold  is  left  to  the  decision  of  the  average 
consumer,  and  that  Capitalism  is  thus  truly 
democratic  in  spirit  as  compared  with  the 
bureaucratic  tyranny  that  would  be  set  up  by 
State  Socialism  or  the  Guild  tyranny  that  the 
Guild  Socialists  would  set  up  if  ever  they  could 
arrive  at  a  workable  scheme ;  that  the  price 
which  the  consumer  pays  for  an  article  has  to 
cover  payment  for  services  rendered  by  labour, 
management,  capitalists  and  adventurers ;  that 
the  claim  of  capital  to  its  interest  and  profit  is 
admitted  by  Mr.  Ramsay  Macdonald  to  be 
sound,  and  can  be.  shown  to  be  so  by  a  state- 
ment of  the  obvious  facts  about  production. 
But  the  question  of  the  share  that  the  wage- 
earners  are  to  get  out  of  the  price  paid  by 
the  consumer  has  not  yet  been  tackled,  and  it 

88 


LABOUR   AND    ITS  PRODUCT     89 

need  hardly  be  said  that  on  the  better  solution 
of  this  problem  the  future  of  Capitalism  de- 
pends. Capitalism  has  not  only  to  be  just 
and  expedient,  and  the  best  system  in  the 
interests  of  the  community.  It  has  to  show 
clearly  that  this  is  so  and  make  the  matter 
plain  to  a  large  number  of  doubters,  who  have 
power  to  wreck  it  if  they  are  not  convinced. 

We  can  approach  the  problem  from  a  different 
angle  by  considering  a  claim  which  has  often 
been  put  forward  by  writers  on  the  subject  of 
labour  and  capital,  namely,  the  right  of  labour 
to  the  "  whole  of  its  produce."  An  interesting 
book  on  this  subject  has  been  written  by  Dr. 
Anton  Menger,  Professor  of  Jurisprudence  in 
the  University  ol  Vienna,  and  translated  into 
English  with  an  introduction  by  Professor 
Foxwell. 

On  page  2  of  this  work,  Dr.  Menger  describes 
what  he  considers  the  "ideal  law  of  property 
from  the  economic  point  of  view."  This,  he 
says,  "  would  be  attained  in  a  system  which 
ensured  to  every  labourer  the  whole  produce 
of  his  labour,  and  every  want  as  complete 
satisfaction  as  the  means  at  disposal  would 
allow."  He  observes  that  "our  actual  law  of 
property  which  rests  almost  entirely  on  tra- 
ditional   political    conditions,    does    not    even 


90    THE   CASE    FOR   CAPITALISM 

attempt  the  attainment  of  these  economic  ends. 
Originally  the  occupation  of  most  countries  was 
effected  by  conquest  and  settlement,  and  since 
then  the  sword  has  sufficiently  often  modified 
the  existing  distribution  of  property.  When 
the  State  began  to  legislate  as  to  rights  of 
possession,  it  was  generally  content  to  sanction 
actual  relations  with  a  few  unimportant  alter- 
ations ;  so  that  it  is  easy  to  see  how  our 
property  law,  being  the  outcome  of  quite  other 
than  economic  conceptions,  seeks  neither  to 
secure  to  the  labourer  the  full  produce  of  his 
labour,  nor  to  guarantee  to  existing  wants  the 
greatest  feasible  satisfaction.  Our  present  law 
of  property  which  centres  in  private  possession 
does  not,  in  the  first  place,  guarantee  to  the 
labourer  the  whole  product  of  his  labour.  By 
assigning  the  existing  objects  of  wealth,  and 
especially  the  instruments  of  production,  to 
individuals  to  use  at  their  pleasure,  our  law 
of  property  invests  such  individuals  with  an 
ascendancy,  by  virtue  of  which,  without  any 
labour  of  their  own,  they  draw  an  unearned 
income  which  they  can  apply  to  the  satisfaction 
of  their  wants.  This  income,  for  which  the 
legally-favoured  recipients  return  no  personal 
equivalent  to  society,  has  been  called  rent  by 
the  St.   Simonians ;    by   Thomson  and    Marx, 


LABOUR  AND  ITS  PRODUCT  91 

surplus  value.  I  intend  to  call  it  unearned 
income.  The  legally  recognized  existence  of 
unearned  income  proves  in  itself  that  our  law 
of  property  does  not  even  aim  at  obtaining  for 
the  labourer  the  whole  product  of  his  industry." 

Thus,  Dr.  Anton  Menger,  approaching  the 
problem  from  a  different  point  of  view,  seems  to 
agree  with  Mr.  Cole,  quoted  in  my  last  chapter, 
that  the  capitalist  is  a  thief  who  lives  upon  the 
work  of  others  whom  he  deprives  of  their  full 
reward  for  the  work  that  they  do.  It  may  be 
noted  that  he  admits  himself  that  the  occupation 
of  most  countries  was  effected  by  conquest 
and  settlement,  and  he  seems  to  regard  neither 
of  these  forms  of  activity  as  involving  any 
labour,  or  entitling  those  who  carried  them  out, 
and  their  heirs  who  followed  them,  to  any  reward 
for  the  exertions  then  made.  In  fact,  as  has 
already  been  pointed  out,  military  service  was 
a  form  of  labour  which  was  called  for  by  the 
community  at  the  time  when  it  was  fashionable, 
and  therefore  seems  to  be  just  as  much  entitled 
to  its  reward  as  that  of  many  popular  novelists, 
popular  entertainers  and  popular  swindlers  of 
to-day  whom  the  demands  of  the  public  enrich 
to  the  astonishment  of  detached  observers. 

It  may  also  be  noted  that  the  two  essentials 
of    the    ideal    law    of    property    assumed    by 


92     THE   CASE    FOR   CAPITALISM 

Dr.  Menger  are  hard  to  reconcile  one  with 
another.  If  every  labourer  is  to  have  the 
whole  produce  of  his  labour,  it  seems  to  be 
impossible  to  arrange  matters  so  that  all  the 
wants  of  all  members  of  society  will  be  as  com- 
pletely satisfied  as  the  means  of  disposal  will 
allow.  One  essential  is  based  on  the  principle 
of  reward  in  proportion  to  labour ;  the  other 
on  reward  in  proportion  to  "wants" — a  very 
different  matter. 

Let  us  consider  this  question  of  the  surplus 
value,  or  unearned  income,  of  which  the 
capitalist  is  accused  of  robbing  Labour.  Mr. 
Philip  Snowden,  on  page  ']2^  of  his  book 
on  Socialism  and  Syndicalism,  makes  the 
following  remarks  on  this  theory.  "  The 
doctrine  of  surplus  value,  or  of  surplus  labour 
as  it  is  sometimes  called,  is  not  like  a  theory 
of  value — an  abstract  idea.  It  is  a  concrete 
fact.  The  modern  capitalist  system  is  so 
highly  organized  and  its  operations  are  so 
intricate,  that  the  unpaid  value  of  the  worker's 
product  is  often  obscured,  yet  it  can  be  found 
in  concrete  form  by  a  little  investigation.  The 
existence  of  a  rich  class  who  do  no  labour  is 
the  conclusive  proof  of  the  claim  that  labour 
does  not  receive  all  that  labour  creates,  but 
that  a  surplus  over  and  above   the   wages  of 


LABOUR   AND    ITS   PRODUCT    93 

labour  is  appropriated  in  some  way  and  in  some 
form  by  those  who  do  no  work.  But  to  admit 
the  truth  of  the  doctrine  of  surplus  value  does 
not  involve  an  acceptance  of  the  doctrine  in 
the  crude  form  in  which  it  is  expounded  in  the 
Communist  Manifesto,  where  the  idea  is  con- 
veyed that  manual  labour  is  the  sole  producer 
of  wealth.  In  his  later  writings,  Marx  seems 
to  express  that  view  at  times,  though  at  others 
he  very  clearly  recognizes  the  contribution 
made  to  production  by  directive  ability  and 
mental  capabilities."  Here,  then,  we  have  a 
slight  but  very  important  variation  of  the 
meaning  of  the  word  "labourer,"  which  has 
now  been  made  to  include  the  owner  of 
directive  ability. 

Labour's  case  for  better  treatment,  like  all 
other  good  cases,  is  only  harmed  by  being 
over-stated,  and  no  one  can  pretend  that  the 
manual  worker  does  everything  which  is  in- 
volved by  modern  production.  But  if  under 
the  word  "  labour "  we  have  to  include  also 
directive  ability,  is  it  not  still  a  very  large 
assumption  that  the  owners  of  it  and  of  manual 
skill  and  strength  could  together  do  everything 
that  is  needed  in  production?  If  we  put  a 
manual  worker,  or  a  thousand  manual  workers, 
with    a    sufficient    number    of    possessors    of 


94     THE    CASE    FOR   CAPITALISM 

directive  ability,  down  on  a  bare  piece  of 
ground,  they  could  produce  nothing  until  they 
had  reclaimed  the  ground  and  furnished  them- 
selves with  the  necessary  tools  and  equipment 
for  production.  In  other  words,  they  would 
have  to  do  a  great  deal  of  work  between  them, 
the  only  product  of  which  would  be  the  ability 
to  do  more  work  later  on  more  efficiently  and 
satisfactorily.  Because  labour  and  manage- 
ment at  the  present  moment  cannot  produce 
anything  without  the  help  of  labour  and 
management  that  has  been  done  in  the  past, 
this  labour  and  management  that  has  been 
done  in  the  past  is  provided  by  the  capitalist 
who  also,  under  modern  conditions  of  production, 
earns  a  profit  by  running  a  risk. 

Mr.  Ramsay  Macdonald,  on  page  62  of  his 
book  that  I  have  already  quoted  on  the 
Socialist  Movement,  said  very  truly  that  there 
is  much  wealth  which  labour  cannot  create 
without  the  aid  of  capital.  "  A  man  can  go 
into  a  forest  and  tear  boughs  off  trees  with  his 
hands  for  his  fires,  but  he  cannot  fell  trees 
without  an  axe  of  some  kind,  which  is  capital." 
The  product  of  labour  by  itself  is  a  miserable 
subsistence  if  without  capital ;  that  is,  without 
the  use  of  work  done  in  the  past — stored-up 
work,  as  we  may  call  it.     The  only  things  that 


LABOUR   AND   ITS   PRODUCT     95 

labour  could  produce  by  itself  would  be  berries 
off  the  trees,  roots  out  of  the  ground,  and 
perhaps  birds  and  beasts  that  the  labourer 
might  or  might  not  be  lucky  enough  to  kill 
with  his  own  hands.  This  could  hardly  be 
called  production.  It  is  simply  taking  what 
Nature  provides.  As  soon  as  labour  wants  to 
produce  in  earnest,  in  the  modern  sense  of  the 
word,  it  has  to  provide  itself  with  some  sort  of 
tool  or  weapon  ;  that  is  to  say,  it  has  to  work 
for  some  time  without  receiving  any  reward,  in 
order  that  it  may  work  more  efficiently  in  the 
future.  As  soon  as  it  has  done  so,  it  becomes 
a  capitalist.  Mr.  Macdonald  rightly  pointed 
out  that  an  axe  is  capital ;  as  soon  as  our 
labourer  has  fashioned  himself  an  axe,  he  has, 
in  fact,  become  a  capitalist.  If  he  manufactures 
his  own  capital  the  interest  on  that  capital  then 
goes  to  himself.  If  he  employs  others  with  it, 
does  he  then  rob  those  others  ? 

Let  us  consider  how  the  whole  process  works 
out  by  going  back  to  the  solitary  man  on  the 
island  whom  we  imagined  in  an  earlier  chapter. 
We  saw  that  in  order  to  fish  more  easily  Crusoe 
made  himself  an  axe,  and  then  built  himself  a 
boat.  He  was  then  able  to  get  a  larger  catch 
of  fish,  and  so  appropriated  to  himself  the 
reward  of  his  labour  whenever  he  went  fishing, 


96     THE    CASE    FOR   CAPITALISM 

plus  the  reward  of  his  further  past  labour  at  a 
time  when  he  built  the  boat,  and  of  the  risk 
that  he  took  of  failure  in  making  the  axe  and 
boat,  and  of  not  being  able  to  catch  any  more 
fish  when  his  boat  was  built.  Let  us  then 
suppose  that  a  fresh  inhabitant,  Friday,  arrives 
on  the  island,  and  also  thinks  that  it  would  be 
nice  to  eat  some  of  the  fish  that  are  easily  to 
be  caught  a  little  distance  from  the  shore. 
Friday  naturally  asks  Crusoe  for  the  loan  of 
his  boat,  and  Crusoe  makes  a  bargain  with  him 
under  which  Friday  is  allowed  the  use  of  the 
boat  for  a  day,  promising  to  give  Crusoe  a  share 
of  any  fish  that  he  may  catch. 

Here  we  have  an  example  of  a  labourer 
apparently  being  robbed  of  part  of  the  produce 
of  his  labour.  Crusoe  can  sit  in  the  sun  at  the 
door  of  his  hut  and  do  no  work  all  day,  on  the 
expectation  that  Friday  will  bring  him  home 
enough  fish  for  supper  when  he  comes  in  from 
his  day's  sport,  but  does  Crusoe  really  rob 
Friday  ?  Friday  surely  is  enabled  by  the 
results  of  Crusoe's  past  efforts,  in  making  the 
axe  and  the  boat,  to  fish  much  more  easily  than 
he  would  have  been  able  to  do  if  he  had  sat  on 
the  rock  and  not  gone  out  to  sea.  A  large 
part  of  his  catch  is  in  fact  the  result  of  Crusoe's 
past  labour,  and  Friday,  with  this  help,  is  able, 


LABOUR  AND    ITS    PRODUCT     97 

after  paying  Crusoe's  share,  to  keep  a  larger 
supper  for  himself  than  he  could  have  caught 
without  it.  Mr.  Snowden  argues  that  there 
must  be  surplus  value  or  unearned  income 
because  certain  people  are  not  obliged  to  work. 
But  Friday's  case  seems  to  show  that  labour 
shares  in  the  unearned  income,  which  is  not 
really  unearned,  but  earned  by  labour  done  in 
the  past. 

Then  there  comes  another  inhabitant,  Satur- 
day, who  also  wants  the  boat.  How  is  Crusoe 
to  decide  whether  he  shall  lend  it  to  Friday  or 
to  Saturday?  He  will  naturally  lend  it  to  the 
one  who  promises  him  the  largest  share  of  fish. 
Here  we  see  him  enjoying  socially  created 
wealth  because  the  appearance  of  a  third  in- 
habitant has  brought  in  the  element  of  com- 
petition, and  enabled  him  to  secure  a  larger 
proportion  of  fish  than  he  would  have  been 
able  to  get  if  the  stimulus  of  competition  had 
not  increased  the  value  of  his  boat.  Never- 
theless, the  fact  remains  that  the  boat,  which 
is  his  stored-up  work,  is  still  the  basis  of  his 
claim  upon  a  share  of  the  work  of  whichever 
of  the  competitors  succeeds  in  getting  the  boat. 
If  we  suppose  that  he  lends  the  boat  to  Friday, 
we  may  then  go  on  to  assume  that  Saturday, 
being  anxious  for  food,  and  not  handy  enough 


98     THE    CASE    FOR   CAPITALISM 

to  pick  up  a  living  for  himself  by  himself,  may 
be  ready  to  earn  a  meal  out  of  Crusoe's  accu- 
mulated store  of  food,  the  proceeds  of  his  past 
work,  or  out  of  the  fish  which  he  expects  to  get 
from  Friday — again  the  proceeds  of  his  past 
work — in  return  for  a  day's  work  which  Satur- 
day promises  to  do  on  Crusoe's  wheat  patch, 
weeding  it,  or  digging  it,  or  enlarging  it. 

Crusoe  is  now  becoming  a  capitalist  on  a 
large  scale,  employing  two  workers.  If,  then, 
other  inhabitants  appear,  Crusoe  may  make 
bargains  with  them  to  make  new  axes  and 
build  new  boats  acting  under  his  direction,  and 
with  the  advantage  of  the  experience  that  he 
gained  by  his  earlier  efforts.  He  sets  them  to 
work  on  improving  the  equipment  of  the  whole 
of  the  community,  while  Friday  continues  to 
work  for  him  as  a  fisherman,  and  Saturday  as 
a  farm  labourer.  In  the  case  of  the  later 
comers,  when  no  actual  stored-up  work  is  being 
applied  by  Crusoe  to  their  efforts,  when  they 
themselves  are  going  to  make  the  axes  and 
build  the  boats,  it  would  seem  at  first  that 
Crusoe  has  no  claim  whatever  to  remuneration  ; 
but  here  again  it  will  be  seen  that  during  the 
period  in  which  they  are  doing  work  which  will 
produce  no  result  that  can  be  immediately 
consumed,  he  will  have  to  maintain  them  either 


LABOUR   AND   ITS    PRODUCT     99 

out  of  his  store  of  food,  which  is  his  past  work, 
or  out  of  the  food  raised  under  his  direction  by 
Saturday,  whose  work  has  been  made  more 
effective  by  past  work  which  Crusoe  had  already 
put  into  the  agricuhural  development  of  the 
island,  and  further  that  Crusoe's  experience 
and  directive  ability  will  earn  its  reward  in 
directinor  them  in  their  task. 

Finally,  there  may  arrive  a  new-comer, 
Sunday,  a  man  of  real  organizing  ability  whom 
Crusoe  appoints  to  relieve  him  of  all  the  direct- 
ing and  organizing  work  required  by  the  varied 
business  that  he  is  now  carrying  on — farming, 
fishery  and  boat  building — in  return  for  a  share 
of  the  food  which  the  enterprises  already  founded 
and  conducted  by  Crusoe  are  producing.  Sun- 
day is  his  managing  director,  and  undertakes 
the  task  of  overseeing  the  work  of  all  the  others, 
and  seeing  that  Crusoe's  share  of  the  produce 
is  duly  paid  to  him.  Crusoe  has  now  become 
an  idle  capitalist  living  on  the  surplus  value 
apparently  created  by  those  who  are  working 
for  him,  but  actually  called  into  being  largely 
by  his  own  past  work,  directive  power,  and 
readiness  to  take  a  risk.  He  can  sit  all  day 
and  meditate,  or  stroll  at  his  ease  over  the 
island,  while  other  people  work  and  supply 
surplus    value    for   his    clothing   and    feeding. 


loo    THE    CASE    FOR   CAPITALISM 

This  he  has  done  by  placing  the  results  of  his 
past  work  at  the  disposal  of  the  others,  so  that 
they  by  working  on  it,  and  with  it,  can  more 
easily  earn  a  subsistence  for  themselves, 
providing  a  surplus  value  for  him  and  for 
themselves,  to  the  benefit  of  all  parties 
concerned. 

If  we  ask  why,  when  once  the  second  boat 
has  been  built,  Crusoe  should  have  any  right 
to  any  extra  catch  of  fish  that  is  secured  by  its 
use,  the  answer  is  that  by  devoting  the  work  of 
those  who  came  and  asked  him  for  food  in 
return  for  their  labour  to  increasing  the  pro- 
ductive equipment  of  the  island,  he  has  in  fact 
made  that  effort  of  abstinence  which  so  much 
amused  Mr.  Bernard  Shaw,  as  was  shown  by  a 
quotation  from  him  in  a  previous  chapter. 
Instead  of  employing  those  who  built  the 
second  boat  upon  this  work,  which  was  going 
to  increase  the  food  supply  of  the  community, 
Crusoe  might  very  well  have  turned  their  labour 
in  the  direction  of  increasing  his  enjoyment  of 
comfort  and  luxury  for  the  moment.  He  might, 
for  example,  have  put  one  of  them  on  to  the 
task  of  singing  songs  to  him,  or  telling  him 
stories,  or  making  faces  at  him  just  as  enter- 
tainers do  at  a  twentieth-century  cinema  show. 
He  might  have  set  them  to  work  on  making 


LABOUR   AND    ITS    PRODUCT     loi 

his  hut  more  water-tight,  or  on  making  him  a 
new  suit  of  clothes,  or  on  building  a  Sedan 
chair  for  him,  and  carrying  him  about  the  island, 
thus  relieving  him  of  the  trouble  of  walking,  and 
giving  him  the  savage  counterpart  of  the  joys 
of  motoring.  In  other  words,  he  might  have 
turned  their  activities  into  a  non-productive 
channel,  which  would  have  increased  his  enjoy- 
ment of  a  slothful  existence  but  left  the  total 
output  enjoyed  by  the  rest  of  the  community 
unimproved. 

He  also  might  have  spent  the  resources  that 
he  had  available  for  feeding  his  workmen  on  his 
own  gluttonous  enjoyment,  instead  of  investing 
it  in  improving  the  equipment  of  the  island  for 
further  production.  Had  he  done  so,  he  would 
have  had  what  is  called  a  "good  time  "  for  the 
moment,  but  his  band  of  workmen  would  have 
been  thrown  out  of  employment,  because  he 
would  have  had  nothing  wherewith  to  pay 
them,  and  they  would  have  to  go  and  fend 
for  themselves  and  pick  up  what  they  could 
in  other  parts  of  the  island,  either  becoming 
capitalists  themselves  and  building  up  for 
themselves  possessions  out  of  their  own  past 
labour,  or  leading  a  hand-to-mouth  existence 
with  a  considerable  chance  of  dying  from 
hunger. 


I02     THE   CASE    FOR   CAPITALISM 

So  far  it  has  been  easy  to  show  a  good  case 
for  the  reward  earned  by  our  capitalist,  Crusoe. 
Everything  that  he  has  earned  had  been  either 
from  the    work  of  his  own  hands  or    by    the 
efforts  of  other  people  working  on  his  own  past 
work,  or  being  fed  out  of  the  proceeds  of  his 
own   past   work,    or   working   under   his   own 
direction,  or  being  fed  out  of  the  proceeds  of 
the  organization  which  his  work  and  directive 
ability  have  built  up.     He  made  the   original 
axe,  and  fashioned  the  original  boat,  which  were 
the    beginnings    of    the    community's   capital. 
Thus  the  "concrete  fact"  of  the  existence  of 
surplus  value   on  which  Mr.   Philip   Snowden 
laid  stress,  brings  us  to  a  different  conclusion 
from  the  one  which  he  drew  from  it.     He  saw 
in  the  existence  of  a  rich  class  who  do  no  work, 
"  conclusive  proof  of  the  claim  that  labour  does 
not  receive  all  that  labour  creates,"  echoing  Dr. 
Anton  Menger's  view  that  under  our  present 
arrangements  no  attempt  is  made  to  give  every 
labourer  the  whole  produce  of  his  labour.     With 
all  deference  to  Mr.   Snowden,  whose  earnest 
and  devoted  work  on  behalf  of  the  wage-earners 
all  must  respect,  it  seems  to  me  that  the  exist- 
ence of  surplus  value  is  proved  not  merely  by 
the  existence  of  the  rich  class  that  does  no  work, 
but  also  by  the  fact  that  the  wage-earners  secure 


LABOUR   AND    ITS    PRODUCT     103 

a  standard  of  comfort  which  is  very  much  better 
than  the  miserable  and  precarious  subsistence 
which  would  be  theirs  if  they  were  obliged  to 
depend  for  a  livelihood  on  all  that  they  could 
produce  without  the  help  of  capital.  Surplus 
value  is  continually  being  produced  for  us  by 
the  work,  management  and  enterprise  of  those 
who  went  before  us.  All  classes  share  in  this 
surplus  value.  A  small  number  of  rich  people 
can  live  «without  working  at  all,  A  large 
number  of  poor  people  get  a  much  better  life 
than  they  could  produce  by  their  own  exertions. 
How  would  the  forty-seven  million  inhabitants 
of  the  British  Isles  fare  if  there  were  not  a  tool 
or  a  machine  or  a  wagon  or  a  railway  in  them, 
and  not  a  ship  to  bring  them  goods  from  over- 
sea ?  Most  of  them  would  be  dead  in  a 
month. 

Capital  tnen  is  the  axe  or  plough  or  store  of 
food  or  of  seed,  and  labour  is  the  man  with 
nothing  but  his  hands.  Capital  can  make 
nothing  by  itself,  and  the  owner  of  it,  the 
capitalist,  can  only  make  it  productive  by  apply- 
ing labour  to  it,  his  own  or  a  wage- earner's. 
Labour  by  itself  can  only  gather  berries  or  dig 
up  roots  ;  in  order  to  produce,  it  must  fashion 
tools  and  acquire  a  store  to  keep  itself  during 
the  process  of  production.     It  may  be  answered 


I04    THE   CASE    FOR  CAPITALISM 

that  in  fact  under  modern  conditions  of  pro- 
duction all  the  machinery  that  is  provided  by 
capital  is  actually  made  by  labour.  The  wage- 
earners  build  the  railways,  dig  out  and  fetch 
the  raw  material,  and  put  it  through  the  pro- 
cesses that  make  it  into  machinery.  But  labour 
has  done  all  this  under  direction  provided  by 
managers  working  for  capital  and  paid  by 
capital,  and  labour  could  not  have  done  it  if 
capital  had  not  paid  it  wages  out  of  previously 
accumulated  stores,  which  capital  paid  for  out 
of  money  that  it  earned  or  got  by  some  service 
or  action  for  which  it  was  paid  by  the  then 
existing  sense  of  the  community.  Capital  and 
labour  both  live  to  an  extent  that  few  of  us 
realize  on  the  exertions  of  those  who  have  gone 
before,  directed  and  paid  for  by  those  who  had 
the  control  of  industry  that  is  given  by  wealth. 
If  the  owners  of  that  wealth  had  spent  it  on 
immediate  enjoyment  instead  of  equipping  the 
country  with  productive  machinery,  so  as  to 
earn  a  profit  for  themselves  and  their  succes- 
sors, the  country  could  not  have  maintained  a 
fraction  of  its  present  population,  and  many  of 
those  who  now  denounce  the  capitalist  as  an 
exploiter  or  a  thief  would  never  have  been 
born.  They  owe  their  very  existence  to  the 
alleged  exploiter. 


LABOUR   AND    ITS    PRODUCT    105 

These  things  had  to  be  said  because  the 
wage-earner's  case  is  not  helped  by  being  over- 
stated, and  if  the  wage-earner  is  taught  to 
believe  that  he  can  do  everything  by  himself 
he  is  likely  to  make  mistakes  that  will  cost  him 
dear.  His  case  is  quite  strong  enough  to  stand 
on  the  facts  of  the  matter.  Without  him 
capital  can  do  nothing  in  the  way  of  produc- 
tion and  little  in  the  way  of  selling  what  it 
produces  with  his  help.  Nothing  could  be 
more  short-sighted  than  the  view  of  some 
narrow-minded  and  stupid  employers  that  it 
pays  capital  to  pay  low  wages.  Quite  apart 
from  the  question  of  bad  work  owing  to  bad 
pay,  this  doctrine  forgets  that  capital  has  to 
work  for  the  consumer,  and  that  a  great 
majority  of  consumers  are  wage-earners  and 
their  dependents.  High  wages,  if  they  do 
not  lead  to  slack  work  and  bad  timekeeping, 
mean  high  buying  power  and  a  good  and 
steady  market  for  articles  of  general  consump- 
tion. Every  producer  or  handler  of  such 
articles  is  benefited  by  an  increase  in  the  pay 
given  to  the  wage-earners  employed  by  all 
other  employers.  Therefore  it  is  clearly  to  the 
interest  of  industry  as  a  whole  and  ultimately 
of  his  own  enterprise.  A  busy  community 
with  well-distributed  buying  power  is  what  will 


io6    THE   CASE    FOR   CAPITALISM 

pay  us  all  best  in  the  long  run,  as  a  matter  of 
mere  business,  to  say  nothing  of  the  political 
and  social  advantages  of  such  a  state  of  things. 
If  employers  think  that  they  can  secure  this  by 
keeping  their  wage  bill  as  low  as  possible  and 
if  wage-earners  think  that  it  can  be  done  by 
restricting  output  we  shall  never  get  there. 

Nevertheless  all  that  has  been  said  above 
concerning  the  benefit  derived  by  labour  from 
work  directed  and  paid  for  by  capital  in  the 
past  has  not  really  disposed  of  the  difficulty, 
that  was  touched  on  in  the  last  chapter,  about 
the  advantage  given  to  certain  individuals  by 
the  institution  of  hereditary  property.  Even 
if  the  wage-earners  recognize  that  they  are 
much  better  off  than  they  would  have  been  it 
no  capitalists  had  equipped  the  country  for  pro- 
duction, they  still  have  to  be  convinced  that  it 
is  not  unfair  to  them  that  the  heirs  of  those 
capitalists  should  take  to  this  day  so  large 
a  share  of  what  labour  and  capital  produce 
between  them.  The  system  gives  those  heirs 
the  power  not  only  to  live  without  working  but 
to  set  aside  out  of  their  share  of  surplus  a 
further  store  of  capital  which  increases  their 
future  claim  on  the  product  of  industry. 
Going  back  to  the  example  of  our  Crusoe 
capitalist,  if  we  suppose  that  during  his  growth 


LABOUR   AND   ITS   PRODUCT     107 

into  a  capitalist  he  has  acquired  a  mate  and 
left  a  family,  and  that  when  he  dies  his  youthful 
son,  who  has  never  done  a  stroke  of  work  in 
his  life,  succeeds  to  the  whole  of  the  property 
and  organization  which  Crusoe  has  built  up, 
and  that  the  other  inhabitants  of  the  island  and 
their  progeny  are  expected  to  work  for  Crusoe, 
Junior,  on  the  same  terms  on  which  they 
worked  for  the  original  organizer,  then  we  find 
ourselves  faced  with  a  claim  that  is  much  more 
difficult  to  justify.  Why  should  this  youngster, 
just  because  he  is  the  son  of  a  successful 
organizer,  be  supported  during  the  rest  of  his 
existence  by  the  labour  of  others  with  the  con- 
fident expectation  that  he  will  be  able  to  hand 
on  to  his  own  progeny  a  similar  claim  on  the 
labour  of  the  workers  of  the  world  ? 

We  may  say  that  hereditary  property  has 
been  an  essential  part  of  every  civilization 
worthy  of  the  name  which  has  been  produced 
since  the  history  of  man  has  been  known.  But 
so  have  many  things  which  are  difficult  to 
justify,  except  on  the  ground  that  having 
existed  they  must  have  for  some  inscrutable 
reason  been  necessary.  A  Roman  or  a  Greek 
would  have  probably  given  the  same  answer  if 
one  had  questioned  the  equity  and  justice  of 
the  institution  of  slavery.     Moreover,    landed 


io8     THE    CASE    FOR   CAPITALISM 

property  under  the  feudal  system  only  went  on 
from  father  to  son  on  payment  of  a  substantial 
fee  by  the  heir  to  the  Crown,  so  that  it  was  by 
no  means  the  indefeasible  ri^ht  which  it  is  now 
too  often  assumed  to  be.  Our  Chancellors  of 
the  Exchequer  by  imposing  heavy  estate  duties 
on  the  passing  of  property  on  the  death  of 
an  owner,  recognize  that  property,  being  only 
transferred  to  those  whom  the  owner  wishes  it 
to  go  to,  owing  to  the  security  afforded  by  our 
modern  social  arrangements,  has  to  pay  this 
periodic  toll  for  the  right  to  be  left  by  will. 
This  toll  being  exacted,  however,  it  seems  to 
be  equitable  that  those  who  get  wealth  by 
serving  the  community  should  have  the  right  to 
give  it  in  their  lifetime  and  leave  it  when  they 
die. 

The  justification  of  the  system  on  the 
grounds  of  economic  expediency  is  obvious. 
If  hereditary  property  were  abolished,  and  the 
consequence  were  that  no  one  cared  to  earn 
more  than  he  wanted  to  consume,  the  fund,  out 
of  which  new  railways  are  built,  new  factories 
and  ships  are  placed  at  the  disposal  of  industry 
and  commerce,  would  be  very  seriously  dimin- 
ished. It  is  only  by  successful  investments, 
that  is  by  actually  increasing  the  general  out- 
put of  goods  and  services,  that  capitalists  can 


LABOUR  AND    ITS   PRODUCT     109 

maintain  and  increase  their  claim  on  industry's 
product.  And  whenever  they  increase  in- 
dustry's output  a  large  part  of  the  price  that 
consumers  pay  goes  to  labour.  As  has  been 
shown,  capital  without  labour  is  powerless  to 
produce.  The  wage-earner  is  thus  most  likely 
to  earn  good  wages  when  there  are  as  many 
capitalists  as  possible  putting  new  capital  into 
industry  and  competing  for  the  services  of 
the  wage-earner  as  a  worker,  and  for  his 
custom  as  a  consumer.  If  labour  prefers  to 
frighten  and  threaten  the  capitalist,  the  latter 
will  be  scarce  and  shy  and  his  capital  will  be 
scarce  and  dear.  Moreover  the  responsibilities 
that  are  attached  to  the  ownership  of  wealth 
are  not  always  learnt  by  those  who  gain  it  in 
their  own  lifetimes.  Bad  spending,  as  is  par- 
ticularly evident  at  present,  is  a  specially 
prevalent  vice  among  those  who  have  suddenly 
grown  rich.  We  might  cure  this  disease  by 
having  no  rich  at  all,  but  this  cure  would  mean 
the  adoption  of  a  new  economic  system,  with 
dangers  that  will  be  shown  when  we  come 
to  examine  the  suggested  alternatives  to 
Capitalism. 

As  it  is,  labour  gets  the  whole  of  its  pro- 
duct and  a  great  deal  more.  If  it  wants  to 
get  also    the   share   of   the  capitalist  and  the 


no    THE   CASE    FOR   CAPITALISM 

adventurer,  it  can  do  so  by  saving  capital  for 
itself  and  risking  it  in  industry,  so  becoming  its 
own  employer  and  provider.  "A  few  shillings 
per  head  from  the  working  class  would  quickly 
raise  the  capital  necessary  to  make  a  trial  of 
democratic  management  in  any  industry."  So 
says  Mr.  Stirling  Taylor,  in  the  Guild  State, 
the  latest  contribution  to  the  literature  of  Guild 
Socialism. 

If  the  wage-earners  determined  to  make 
themselves  masters  of  industry  by  providing 
their  own  capital,  they  could  gain  a  power  that 
would  be  overwhelming.  The  process  would 
be  gradual  and  slow,  but  if  half  that  we  are 
told  is  true  about  workers  who  stay  at  home 
instead  of  going  to  work  as  soon  as  they  have 
earned  enough  to  satisfy  their  immediate  wants, 
steadier  work  would  give  them  a  big  margin 
for  this  purpose  of  strengthening  their  position. 
The  wonderful  success  of  the  co-operative 
movement  has  shown  what  can  be  done.  If 
laboui  provided  its  own  capital,  the  idle 
capitalist  with  no  labour  to  work  for  him  would 
fmd  the  flank  of  his  position  most  effectively 
turned. 

Concerning  the  proportion  of  the  joint 
product  that  is  taken  by  capital,  it  may 
be   interesting   to  quote  a  statement  made  by 


LABOUR   AND    ITS    PRODUCT     iii 

Sir  Hugh  Bell  to  the  shareholders  of  the 
Horden  Collieries,  Ltd.  Coal-mining  being  a 
speculative  industry,  capital  invested  in  it  may 
be  expected  to  yield  on  the  average  a  higher 
rate  than  most  other  enterprises.  Sir  Hugh, 
as  reported  in  the  Times  of  December  4,  19 19, 
said  : — 

"  While   I   am   dealing  with  the  position  in 
which  you  find  yourselves,  it  may  interest  you 
to    know  that   the  total   amount  disbursed  in 
dividends  over  the  whole    19  years   that    the 
company  has  existed   is  just  over  one  million 
pounds — to  be  accurate,  ^1,010,000.    Last  year 
we  paid  in  wages  to  men  directly  in  our  em- 
ployment ;^ 1, 01 9,000.      In    19  years  we  have 
distributed    ;!^  1,000, 000    in    dividends,    and    in 
one  year  we  paid  ^1,000,000  in  wages.     That 
figure    of   /^ 1, 000,000    in    wages    corresponds 
exactly  with   the  figure   I    have   already  cited 
on  former  occasions.     The  total  amount  of  our 
outgoings  last  year  is  just   under  ^2,000,000. 
The  wages  we  have  paid   to  our  own  i)eopIe 
are,  as  I   told  you,  just  over  a  million,  so  that 
just  about   50  per  cent,  of  the  total  outgoing 
of  your  company  goes  in  wages — in  the  form 
of  wages,  because  I  have  to  take  into  account 
the  coals  you   supply  to  the  men,  and  I   also 
have  to    take   into  account   the  cottage   rents, 


112     THE   CASE    FOR   CAPITALISM 

which  are  part  of  the  wages.  If  you  come  to 
examine  the  other  items,  such  as  stores  and 
so  on,  you  will  find  that  something  like  the 
same  proportionate  amount  has  been  paid  in 
wages,  so  that  you  have  paid  out,  directly 
and  indirectly,  for  wages  ;^  1,500,000  out  of 
;^2, 000,000.  That  is  to  say,  you  disburse  75 
per  cent,  in  wages  and  salaries.  Out  of  every 
ton  of  coal  you  sell,  one  half  of  the  selling 
price  goes  to  pay  wages  of  the  men  in  your 
employment,  and  of  the  remaining  half,  about 
a  like  proportion  is  paid  in  wages  by  the 
persons  from  whom  you  buy  your  stores,  etc., 
so  that  directly  you  pay  away  50  per  cent.,  and 
indirectly  25  per  cent.,  in  wages  and  salaries. 
Out  of  just  under  ;!f 2, 000,000  there  remains 
^200,000  or  thereabouts  as  your  share.  You 
will  see  on  how  narrow  a  margin  you  are  con- 
ducting your  trade,  and  how  relatively  small 
an  increase  of  wages  would  absorb  all  that 
margin  and  leave  you  with  no  dividend  at  all." 


CHAPTER   VI 

THE   ACHIEVEMENTS   OF    CAPITALISM 

So  far  we  have  seen  that  the  claim  of 
the  capitalist  to  interest  on  his  money  and 
profit  in  return  for  risks  which  he  takes,  is 
fully  justified  on  economic  grounds  and  in 
equity,  and  that  the  claim  of  some  champions 
of  labour  that  labour  is  entitled  to  the  whole 
of  its  product,  is  more  than  fully  satisfied, 
because  already  and  as  it  is  labour  gets  out 
of  industry  a  great  deal  more  than  it  could 
provide  for  itself  if  it  were  not  supplied  by 
capitalists  with  machinery,  plant  and  organi- 
zation by  which  its  output  is  enormously 
increased. 

Capitalism,  then,  is  not  based  on  injustice. 
Let  us  look  now  at  the  question  of  its  practical 
success.  A  glance  at  the  progress  of  mankind 
since  the  Industrial  Revolution  brought  modern 
Capitalism  into  being,  shows  at  once  that  its 
achievements  have  been  enormous,  one  might 
H  113 


114     THE   CASE    FOR   CAPITALISM 

almost  say  miraculous.  An  obvious  test  is  that 
of  population.  Dr.  Shadwell,  in  an  article  on 
the  History  of  Industrialism  in  the  Encyclo- 
pcedia  of  Industrialism,  sli/Dvvs  that  while  in  the 
last  century  before  private  Capitalism  became 
powerful — between  1651  and  1751 — the  popu- 
lation of  Great  Britain  rose  from  6,378,000  to 
7,392,000,  an  increase  of  1,014,000,  in  the  next 
century — 1751  to  1851 — it  rose  to  21,185,000, 
an  increase  of  13,793,000,  and  in  the  next  60 
years — 1851  to  191 1 — it  rose  by  19,350,00010 
40»535.ooo-  li^  commenting  on  the  difference 
between  the  increase  in  the  two  centuries — 
1651  to  1751,  and  1751  to  1851 — Dr.  Shadwell 
observes  (page  304)  that  "  the  difference  is  not, 
of  course,  wholly  due  to  the  industrial  factor ; 
but  the  two  go  together,  and  the  vast  increase 
of  life  during  the  second  century  negatives  the 
common  assumption  that  Industrialism  pro- 
duced a  state  of  unprecedented  and  increasing 
misery.  This  is  emphasized  by  the  fact  that 
the  rate  of  increase  was  highest  during  the 
first  decades  of  the  nineteenth  century,  when 
the  change  was  proceeding  at  its  maximum 
intensity.  The  rates  of  increase  in  England 
were:  1 801  11,  i4"50  per  cent.;  i8n-2i, 
i8"05    pG**    cent.;     1821-31,    i6'24    per    cent.; 


ACHIEVEMENTS  OF  CAPITALISM  115 

1 83 1-4 1,  14*58  per  cent.  These  rates  have 
only  been  approached  in  one  subsequent  de- 
cade— that  of  187 1-8 1 — which  included  several 
years  of  the  highest  prosperity  on  record, 
when  the  rate  was  14*5  per  cent.  The 
rising  tide  of  vitality  revealed  by  statistics  is 
in  keeping  with  the  observations  of  the 
French  traveller  Louis  Simond,  quoted  by 
Professor  Smart,  in  1810-11:  *I  have  found 
the  great  mass  of  the  people  richer,  happier, 
and  more  respectable  than  any  other  with  which 
I  am  acquainted.' " 

Increase  of  population  is  not,  of  course,  a 
wholly  satisfactory  test  by  itself.  It  is,  in  fact, 
maintained  by  some  Malthusians  that  increase 
of  population  is  a  sign  of  a  low  state  of  civiliza- 
tion, and  a  low  standard  of  comfort,  and  this 
contention  is  to  some  extent  supported  by  the 
well-known  fact  that  the  birth-rate  shows  a 
tendency  to  decline  among  those  classes  whose 
circumstances  are  most  comfortable  and  whose 
standard  of  life  is  highest.  Nevertheless  it 
is  something  for  Capitalism  to  claim  that  it  has 
enabled  so  enormous  an  increase  to  take  place 
in  the  population  of  the  country,  in  which 
modern  Capitalism  and  the  modern  Industrial 
system    first   opened    their   keen    young   eyes, 


ii6     THE    CASE    FOR   CAPITALISM 

and  have  carried  out  their  most  characteristic 
development.  Merely  to  enable  so  large  a 
number  of  people  to  be  alive  is  not  every- 
thing, but  it  is  a  great  deal.  Under  Capitalism 
all  these  millions  saw  the  light  of  the  sun, 
smelt  the  scent  of  spring,  knew  love  and  friend- 
ship, made  and  laughed  at  good  and  bad  jokes, 
ate  and  digested  their  meals,  made  their  queer 
guesses  at  the  secret  of  life,  played  games,  read 
books,  cherished  their  hobbies  and  their  preju- 
dices, knew  a  little,  thought  they  knew  much 
more,  and  went  their  way  leaving  others  behind 
them  to  take  up  the  thread  of  life  and  spin 
another  strip  of  its  mysterious  cloth. 

If  life  is  on  the  whole  a  good  thing — and  most 
of  us  waste  little  time  in  sending  for  a  doctor  if 
we  do  not  feel  well — Capitalism  has  made  the 
enjoyment  of  that  good  possible  to  millions. 
And  all  the  time  during  which  that  huge  in- 
crease in  our  population  was  growing  we  were 
pouring  out  a  stream  of  emigrants  to  fill  and 
till  the  waste  places  of  the  earth,  and  sending 
them  capital  to  help  them  to  increase  production 
there.  Thus  Capitalism  has  bred  millions  of 
active,  busy  men  and  women,  spread  them  over 
the  world,  reclaimed  its  waste  places  and  in- 
creased its  output  so  fast  that,  as  we  shall  see. 


ACHIEVEMENTS  OFCAPITALISM  117 

the  increased  population  has  increased  its 
command  of  goods  even  more  rapidly  than  its 
numbers.  All  this  has  to  be  chalked  up  to 
Capitalism's  credit  and  considered  carefully 
before,  just  because  it  has  not  created  an  earthly 
Paradise  for  us,  we  throw  it  down  and  put  an 
untried  system  in  its  place.  It  is  true  that  part 
of  our  population  has  lived  and  continues  to  live 
under  circumstances  of  which  our  civilization 
has  every  reason  to  be  ashamed.  But  even  in 
their  case  the  gift  of  life  is  something,  and 
social  reformers  are  rather  apt  to  forget,  in  their 
eagerness  to  put  right  the  evils  which  beset  the 
destitute  among  us,  that  the  greater  part  of  our 
population  leads  and  has  led  lives,  which  though 
far  from  being  ideal  from  an  economic  or  any 
other  point  of  view,  have  taken  them  through 
the  world  in  a  state  of  fair  contentment,  and 
with  a  reasonable  and  growing  share  in  the  gifts 
which  science  has  placed  at  man's  disposal. 
Industrial  and  scientific  progress  in  the  control 
of  the  forces  of  nature,  has  proceeded  with 
astonishing  rapidity  throughout  this  period  of 
production  under  Capitalism. 

It  may  be  argued  that  science  and  invention 
have  done  the  real  work,  and  that  Capitalism 
has  only   picked   their   brains,    applying   their 


ii8     THE   CASE    FOR   CAPITALISM 

lessons  purely  with  the  view  to  making  profit 
out  of  them,  and  so  has  wrested  the  gifts  of 
science  from  their  true  use  and  prevented  their 
being  enjoyed  in  full  freedom  by  the  whole  of 
mankind.  This  may  be  so,  but,  on  the  other 
hand,  science  could  never  have  wrought  its 
miracles  if  there  had  not  been  a  vast  store  of 
accumulated  wealth  to  apply  to  the  development 
of  its  discoveries.  This  accumulated  wealth 
might  perhaps  have  been  produced  by  a  system 
of  society  organized  collectively,  under  which 
the  Government  would  have  seen  the  goals 
towards  which  science  was  struggling,  and 
placed  at  its  disposal  an  army  of  workers  who 
were  capable  of  carrying  out  its  objects.  But 
it  is  at  least  as  likely  that  no  Government 
which  the  world  has  yet  known  would  have 
made  use  of  the  services  of  science  with  the 
readiness,  adaptability  and  courage  in  taking 
risks,  that  have  been  shown  by  the  organizers 
of  industry  spurred  by  the  incentive  of  profit- 
making. 

Whatever  those  people  may  think  who  like 
to  amuse  themselves  with  the  pleasant  science 
of  hypothetics,  that  is  to  say,  of  wondering 
what  might  have  happened  if  things  had  been 
otherwise,  the  fact    remains    that  the  material 


ACHIEVEMENTS  OF  CAPITALISM  119 

achievements  under  Capitalism  have  been  enor- 
mous, and  promise  still  greater  miracles  if  we 
follow    the   same   line.     The   world    has  been 
covered   with  a  network  of  railways,  and  the 
shores  of  its  various  continents  have  been  linked 
together   by    steamships   of  enormous   power. 
Factories  and  machinery  have  been  developed 
and   improved   with    incredible   speed.     Tele- 
graphs and  telephones  have  made  the    whole 
world  into  one  great  listening  gallery,  and  the 
exchange  of  goods  and  the  communication  of 
thought  between  one  country  and  another  are 
being  continually  developed  in  a  manner  which 
only   shows    what    great    possibilities    still    lie 
before  us.     The  material  output  has  grown  at 
a  staggering  pace,  and  the  British  workman  of 
to-day  has  his  life  embellished  and  made  com- 
fortable by  the  products  of  all  the  climates  of 
the  world,  from  tea  to  tobacco,  with  a  freedom 
which    would    have    been    envied    by    many  a 
mediaeval  monarch.     At  the  same  time  if  there 
are  terrible  inequalities  in    the  distribution    of 
•this  wealth,  if  many  at  the  bottom  of  the  econo- 
mic ladder  lead  lives  of  misery,  owing  to  a  lack 
of  the  good  things  of  the  earth,  and  many  at 
the  top  lead  lives  of  boredom  owing  to  a  surplus 
of  luxurious  enjoyment,  it  is  possible  to  climb 


I20    THE    CASE    FOR   CAPITALISM 

from  the  lowest  rung  of  the  ladder  to  the 
highest.  We  cannot  claim  that  the  "  career  is 
open  to  talent,"  or  that  there  is  anything  like  a 
fair  chance  for  all  in  the  race  for  the  good  things 
of  life ;  this  is  an  ideal  for  which  we  have  to 
work  by  improving  and  cheapening  education. 
Talent  backed  by  individual  enterprise  in  any 
case  seems  likely  to  have  a  better  chance  under 
Capitalism  than  under  bureaucratic  red-tape  or 
Guild  monopoly  ;  and  any  one  with  exceptional 
ability  and  exceptional  luck,  or  both,  can  already 
make  his  way  through  from  the  bottom  to  the 
top  early  enough  in  life  to  give  him  many  years 
of  enjoyment  of  his  success. 

Our  output  of  goods  is  still  not  nearly  great 
enough,  being  estimated  before  the  war  at 
about  ;^42  per  head  of  the  population.  Even 
if  it  were  equally  distributed,  ^^42  worth  of 
goods  and  services  would  not,  even  at  pre-war 
prices,  ensure  a  really  high  standard  of  comfort 
for  the  population  as  a  whole.  This  need  for 
an  improvement  in  output  we  saw  at  the  outset 
to  be  essential  in  order  to  secure  that  world  in 
which  it  will  be  really  pleasant  to  live.  But 
because  Capitalism  has  not  yet  produced  as  much 
as  we  want,  is  a  bad  reason  for  overturning  it 
in  favour  of  a  system  that  might  produce  still 


ACHIEVEMENTSOFCAPITALISM  121 

less,  when  it  is  clear  that  capitalistic  production 
can,  if  it  is  given  a  fair  chance,  do  much  better 
for  us  in  the  future  as  it  learns  and  applies  its 
lessons. 

Industrial  and  agricultural  development  had 
also  been  assisted  by  an  extremely  ingenious 
financial  machinery,  and  a  great  growth  and 
improvement  in  banking,  which  provided  credit 
and  currency  for  the  community  with  remark- 
able success  ;  during  the  last  half  century  before 
the  war,  the  financial  machinery  was  perfecting 
itself  into  a  state  of  extraordinary  elasticity  and 
adaptability,  and  meeting  with  steadily  growing 
composure  the  industrial  crises  which  the 
speculative  habits  of  man,  and  the  risks  inevit- 
able from  our  present  industrial  system,  neces- 
sarily produced.  A  machinery  of.  investment 
and  a  market  in  the  debts  and  securities  of 
public  bodies  and  public  companies,  had  also 
been  developed  with  great  ingenuity  by  the 
Stock  Exchanges  of  the  world.  Whoever 
wanted  to  borrow  money  and  invest  it  in  indus- 
try found  ready  listeners — only  too  ready  in 
some  cases — whether  they  applied  to  the  banks 
for  short  credits,  or  to  the  investing  public  for 
permanent  investments,  or  invited  speculators  to 
try  their  luck.     Capital  flowed  with  wonderful 


122     THE   CASE    FOR  CAPITALISM 

readiness  from  one  country  to  another,  and 
wherever  there  was  a  chance  of  devoting  the 
proceeds  of  the  labour  and  work  of  old  countries 
to  the  development  of  new  ones,  in  the  hope  of 
increasing  mankind's  output,  and  so  gaining 
fresh  profits,  there  was  no  lack  of  those  who 
would  risk  their  past  and  present  labour  and 
work  on  this  process  of  continually  expanding 
man's  conquest  over  nature. 

All  classes  had  shared  in  the  benefits  pro- 
duced by  this  expansion.     Mr.  Philip  Snowden 
admits  on  page  38  of  his  book  on  Socialism 
and    Syndicalism,    that    "between     1850    and 
1900  the  rate  of  wages  as  shown  by  Board  of 
Trade  index  numbers,   rose  by   78   per  cent., 
and  in  the  same  period  the  prices  of  commodi- 
ties fell  by  II  per  cent."     He  adds  that  "it  is 
not  safe  to  take  these  figures  upon  their  face 
value.    The  increase  of  wages  was  by  no  means 
spread  uniformly  over  the  whole  wage-earning 
class,  nor  does  a  fall  in  the  average  of  whole- 
sale prices   necessarily  mean    a  corresponding 
reduction  in  the  cost  of  living  to  the  working 
classes.     The  fall  in  prices  in  the  last  half  of 
the  nineteenth  century  was  mainly  in  comforts 
and  luxuries.     Many  of  the  articles  which  enter 
into    the    economy    of  the    workers    increased 


ACHIEVEMENTS  OF  CAPITALISM  123 

in  price.  Milk,  eggs,  butter,  coal  and  rent 
were  all  higher  in  price  at  the  end  than  at  the 
middle  of  the  last  century."  On  the  other 
hand  we  may  fairly  urge  that  comforts  and 
luxuries,  such  as  tea,  sugar,  tobacco  and  meat, 
not  to  mention  necessaries  such  as  bread, 
also  entered  largely  into  the  economy  of  the 
workers. 

When  we  find  that  during  a  half-century  in 
which  the  population  had  increased  rapidly,  the 
average  money  wages  of  the  workers  had  grown 
by  more  than  three-quarters,  while  the  average 
price  of  the  goods  they  consumed  showed  a  by 
no  means  negligible  decline,  we  see  what  little 
basis  there  is  for  what  Marx  and  other  people 
have  called  the  "  iron  law  of  wages,"  an  entirely 
imaginary  law,  which  is  alleged  to  force  the 
rate  of  wages  always  down  to  the  level  of 
subsistence.  If  there  had  been  any  real  truth 
in  this  law,  it  would  have  been  clearly  im- 
possible for  wages  to  rise  by  78  per  cent, 
with  a  rapid  increase  in  the  number  of  wage- 
earners,  while  at  the  same  time  the  average 
price  of  consumable  goods  had  fallen  by  1 1 
per  cent.  Under  the  circumstances,  and  in 
view  of  his  own  figures,  it  is  surprising  to  find 
Mr.  Snowden  saying  on  a  later  page  (120)  that 


124     THE   CASE    FOR   CAPITALISM 

"  like  the  landlord  who  takes  in  the  form  of 
rent  all  above  the  subsistence  of  the  labourer, 
so  the  capitalist  takes  all  above  the  subsistence 
of  the  workman,  above  suf(icient  to  maintain 
the  workman  in  the  standard  of  life  of  the  class 
to  which  he  belongs."  How  Mr.  Snowden's 
clear  and  logical  mind  reconciles  this  assertion 
with  the  figures  that  we  have  quoted  from  him, 
is  a  puzzle  that  would  baffle  the  Sphinx. 

It  has  to  be  admitted  that  the  great  and 
steady  improvement  that  was  then  shown  gave 
way  to  the  opposite  tendency  in  the  early  years 
of  the  present  century.  Mr.  Snowden  con- 
tinues on  page  39:  "After  all,  the  important 
matter  is  not  whether  the  condition  of  the 
workers  improved  between  1850  and  1900,  but 
whether  it  is  showing  a  tendency  to  improve- 
ment now."  (His  book  was  published  shortly 
before  the  war.)  "  About  the  end  of  the  century 
we  seemed  to  enter  upon  a  new  cycle  of  ten- 
dencies. The  previous  slight  (sic)  upward 
movement  in  the  condition  of  the  workers 
was  arrested  and  eventually  reversed.  The 
permanent  tendency  now  is  for  the  rich  to  grow 
richer  at  an  increasingly  rapid  rate,  and  for 
the  workers  to  become  not  only  relatively  but 
actually  poorer." 


ACHIEVEMENTS  OF  CAPITALISM  125 

Mr.  Snowden  is  undoubtedly  right  in  calling 
attention  to  a  check,  which  showed  itself 
at  the  beginning  of  the  twentieth  century, 
in  the  improvement  of  the  position  of  the 
wage-earner.  Wages  rose  little  or  not  at  all 
in  money,  and  prices  were  rising.  Whether 
he  was  right  in  assuming  that  the  tendency 
was  a  permanent  one,  we  shall  never  know, 
because  the  war  intervened,  upsetting  the 
whole  economic  basis  of  society,  and  giving 
the  workers  a  chance  of  sustained  improve- 
ment, of  which  there  is  every  reason  to  hope 
they  will  take  full  advantage ;  but  it  is  at 
least  possible  that  Mr.  Snowden  was  wrong  in 
assuming  that  the  tendency  for  the  buying  power 
of  wages  to  go  back  was  permanent.  It  might 
have  been  merely  the  falling  back  of  a  wave  in 
a  rising  tide,  to  have  been  followed  by  a  still 
more  rapid  improvement,  thanks  to  the  deter- 
mination shown  by  the  wage-earners  in  the 
year  before  the  war,  to  take  drastic  measures 
to  improve  their  position.  However  this  may 
have  been,  there  can  be  no  doubt  that  under 
the  system  of  Capitalism  the  wage-earners  did 
during  the  whole  second  half  of  the  past  century 
achieve  a  great  and  almost  unbroken  improve- 
ment in  their  lot,  an  improvement  which  was 


126     THE   CASE    FOR  CAPITALISM 

encouraging  them  to  make  still  greater  efforts 
for  themselves  in  the  future.^ 

During  the  same  period  we  had  seen  great 
improvements  in  education  and  sanitation,  the 
lengthening  of  human  life,  the  total  extinction 
of  the  plagues  which  used  to  scourge  Europe 
periodically,  the  practical  abolition  of  certain 
diseases  such  as  typhus  and  small-pox ;  and 
the  general  attention  to  health  and  the  mental 
improvement  of  all  classes,  though  it  still  left 
very  much  to  be  desired,  was  making  progress 
which  was  perhaps  as  rapid  as  could  be 
expected,  owing  to  the  ignorance  and  con- 
servatism which  are  the  common  lot  and  the 
pride  of  most  of  us. 

It  may  be  true  that  Capitalism  has  had 
very  little  to  do  directly  with   these  improve- 

^  Professor  Bowley  in  an  article  on  "  Wages "  in  the 
Encyclopedia  of  Industrialism  says  (page  514) :  "It  appears 
certain  that  nominal  and  real  wages  increased  from  1850  to 
1874,  that  nominal  wages  fell  and  real  wages  remained 
steady  from  1874  to  1880,  that  nominal  wages  remained 
steady  and  real  wages  rose  from  1880  to  1887,  and  that  both 
nominal  and  real  wages  rose  from  1887  to  1899.  ...  By 
1910  real  wages  were  back  at  the  level  of  1896-1898,  but 
cannot  be  measured  exactly."  By  real  wages  the  Professor 
of  course  means  wages  as  measured  in  actual  buying  power, 
as  compared  with  nominal  wages,  measured  in  money 
alone. 


ACHIEVEMENTS  OF  CAPITALISM  127 

ments  in  education  and  sanitation.  There  is 
even  something  to  be  said  for  the  view  that 
the  representatives  of  the  property-owning 
classes  had  done  a  good  deal  to  resist  the 
progress  of  these  improvements,  which  had 
only  been  carried  through  by  social  reformers 
and  a  few  scientific  enthusiasts,  after  lives  of 
thankless  effort.  This  may  be  so,  but  never- 
theless the  store  of  wealth  which  was  necessary 
in  order  to  carry  them  out  had  been  called 
into  being  by  the  working  of  Capitalism  with 
the  incentive  of  profit  before  it.  It  may  not 
have  been  responsible  for  the  excellent  use 
thus  made  of  its  wealth,  but  it  did  at  least 
provide  the  wealth  which  was  so  used  by  those 
who  had  nobler  views  than  it  of  the  use  to 
which  wealth  should  be  put. 

Such  were  the  achievements  of  Capitalism  in 
the  land  of  its  birth  in  its  modern  form  and 
in  the  countries  into  which  this  land  poured 
the  men  and  capital  that  it  produced.  Its 
victories,  unlike  those  other  institutions  that 
have  dominated  human  life,  could  only  be  won 
by  doing  what  somebody  else  wants.  Industry 
and  investment  can  only  earn  a  profit  if  they 
produce  an  article  or  a  service  that  somebody 
wants  and  wants  enough  to  repay  the  adventurer 


128     THE    CASE    FOR   CAPITALISM 

his  outlay,  make  good  the  depreciation  of  his 
tools  and  leave  him  a  profit.  He  may  some- 
times win  his  victory  at  the  expense  of  those 
whom  he  has  underpaid,  or  in  some  rare 
cases  by  barbarous  ill-treatment  of  natives 
whom  he  has  enslaved,  overworked  and  even 
tortured.  But  whenever  a  profit  was  made  it 
could  only  be  done  by  providing  some  one  with 
something  that  he  wanted  or  thought  that  he 
wanted.  Capitalism  working  through  com- 
petition and  freedom  must  please  the  consumer 
to  prosper,  and  the  consumer  is  the  mass  of 
humanity.  From  this  point  of  view  its  achieve- 
ments, smirched  and  blotted  as  they  are  about 
the  hinder  parts,  are  sweet  and  cleanly  as 
compared  with  those  of  diplomacy  which  have 
drenched  the  world  in  blood,  or  of  churches 
that  have  used  the  torch  of  God's  Word  to 
light  holocausts  of  good  earnest  people  who 
differed  slightly  with  them  concerning  their 
belief  in  Him. 

Capitalism  incidentally  was  working  for  peace 
though  it  is  commonly  accused  of  being  the 
ally  if  not  the  father  of  Militarism.  Seeing 
that  the  pages  of  history  were  black  with 
Militarism  long  before  Capitalism  in  its  modern 
form  was  heard  of,  to  make  the  latter  the  father 


ACHIEVEMENTS  OF  CAPITALISM  129 

of  the  former  indicates  an  almost  desperate 
search  for  a  stick  to  lay  on  its  back.  It  is  true 
enough  that  Militarism  could  not  have  achieved 
a  fraction  of  its  destructive  power  if  Capitalism 
had  not  provided  the  machinery  and  weapons. 
"  What  d'ye  lack  ?"  is  Capitalism's  cry,  and 
when  humanity  said,  "  Weapons  for  killing  one 
another,  and  see  that  they  kill  by  heaps," 
Capitalism  delivered  the  goods  with  a  ven- 
geance. If  humanity  will  only  ask  for  something 
more  sensible.  Capitalism,  ever  democratic  and 
accommodating  and  anxious  to  please  a  customer, 
will  oblige  with  equal  readiness  and  success. 
Capitalism  fears  and  dislikes  war,  because  war 
means  destruction,  taxation,  unrest  and  lack  of 
confidence,  and  Capitalism  knows  that  though 
it  may  seem  to  make  big  profits  out  of  destruc- 
tion it  will  pay  heavily  for  them  before  the 
account  is  closed,  and  that  it  can  only  earn  a 
good  living  out  of  prosperity  and  peace  and 
progress.  While  some  have  accused  it  of 
fomenting  war,  others  with  a  truer  instinct 
have  denounced  International  Finance  as  an 
incurable  and  incorrigible  Pacifist. 

And  yet,  when  war  came  and  there  was  no 
help  for  it,  the  men  who  had  been  born  and 
bred   under  Capitalism   turned  out  and  fought 


I30     THE   CASE    FOR   CAPITALISM 

with  a  heroism  that  has  never  been  approached 
by  the  Paladins  and  Knights  Errant  of  the 
days  before  we  had  been  turned  into  shop- 
keepers and  demoralized  by  profit-seeking. 
All  who  had  watched  industrial  development 
and  its  effects  in  making  us  sleek  and  sedentary 
townsmen  must  have  wondered  whether  the 
process  would  not  soften  us  into  folk  who  could 
not  stand  the  test  of  battle.  Yet  all  the  battles 
that  had  ever  been'  fought  before  were  child's 
play  to  the  Hell  that  both  sides  lately  rained 
on  one  another  for  four-and-a-half  years,  and 
the  nation  of  shopkeepers  was  in  her  old  place 
in  the  front  row,  wherever  the  fighting  was 
hottest  by  sea  and  land. 

Says  the  critic,  "  There  may  be  some  truth 
in  all  this,  but  what  of  the  disgusting  ugliness 
and  squalor  that  Capitalism,  has  brought  with 
it — lovely  countrysides  covered  with  sordid 
filthy  towns  that  are  a  blot  on  their  beauty,  and 
men  with  their  hearts  still  more  foully  smirched 
by  scamped  work  and  the  scramble  of  com- 
petition ? "  This  is  a  criticism  that  cannot 
be  altogether  gainsaid,  but  it  is  possible  to 
exaggerate  it,  by  imagining  too  rosy  a  picture 
of  the  system  that  Capitalism  superseded. 
Capitalism  committed  crimes  in  its  early  days 


ACHIEVEMENTS  OF  CAPITALISM  131 

when  it  put  young  children  to  work  for 
wickedly  long  hours  under  disgraceful  con- 
ditions, and  is  now  being  punished  by  the 
natural  bitterness  of  their  descendants  who  see 
no  cure  for  it  but  its  destruction.  But  these 
evils  have  been  largely  cured  and  their 
remnants  are  being  dealt  with.  Short-sighted 
Capitalism  has  often  opposed  reforming  meas- 
ures, but  some  good  employers  have  worked 
for  them.  On  the  general  charge  of  ugliness 
and  deterioration  the  argument  is  not  all  on 
one  side.  Doctor  A.  Shadwell,  an  exception- 
ally well-informed  authority  on  working-class 
conditions,  published  an  article  on  this  subject 
called  "Town  Life — Old  and  New,"  in  the 
Edinbu7'gh  Review  of  January  19 18.  It  is  well 
worth  study  in  detail  and  it  may  be  hoped  that 
Dr.  Shadwell  will  develop  the  contrast  on  a 
larger  scale.  The  following  extracts  will  have 
to  suffice  for  our  present  purpose  : — 

"  The  idea  of  a  Golden  Age  is  indestructible. 
Man  will  have  his  Golden  Age  when  all  the 
world  was  young  and  fair.  He  finds  it  by  a 
comparison  which  sets  the  credit  account  of  the 
past  over  against  the  debit  account  of  the 
present.  It  is  a  false  balance-sheet.  The 
true  account  stands  otherwise  ;  it  includes  debit 


132     THE    CASE    FOR   CAPITALISM 

items  against  the  past  and  credit  items  in 
favour  of  the  present,  and  when  the  net  balance 
is  struck  the  result  is  very  different.  And  so  it 
is  with  this  question  of  town  life  and  town 
labour ;  a  distorted  and  one-sided  account  has 
been  put  forward  in  order  to  make  out  a 
case.  .  .  . 

"  Mills  employing  a  number  of  workmen  are 
mentioned  at  the  beginning  of  the  fourteenth 
century  ;  journeymen  formed  a  standing  class 
and  used  to  go  on  strike.  But  the  scale  of 
employment  inaugurated  in  the  eighteenth 
century  amounted  to  a  difference  in  kind,  and 
the  development  of  mechanical  power  made  a 
still  greater  innovation. 

"  Both  changes  were  attended  by  great  evils, 
due  to  three  main  causes  :  (i)  the  rapidity  of 
the  development ;  (2)  general  ignorance  and 
failure  to  understand  the  conditions  ;  (3)  the 
abuse  of  power  by  employers.  The  rapid 
development  of  industry  on  a  large  scale  caused 
a  corresponding  hurried  accumulation  of  persons 
in  particular  places  in  a  haphazard  way.  .  .  . 
A  slower  pace  would  have  resulted  in  a  more 
organic  growth,  but  the,  prevailing  ignorance 
and  indifference  would  have  produced  similar 
conditions  in    the    end   or   rather  worse    ones. 


ACHIEVEMENTS  OF  CAPITALISM  133 

Mr.  and  Mrs.  Hammond^  go  so  far  as  to 
admit  that  '  the  old  English  towns  were  often 
over-crowded,  insanitary,  etc.*  That  does  not 
meet  the  case  at  all.  The  old  towns  every- 
where were  not  'often,'  but  always,  insanitary 
to  a  degree  which  it  is  difficult  to  realize  now. 
They  never  were  anything  else,  because  there 
was  no  sanitation,  as  we  understand  it.  Sanita- 
tion was,  in  fact,  the  child  of  the  new  order  : 
not  because  the  evils  were  new,  as  is  commonly 
supposed,  but  because  they  were  recognized. 
The  increase  of  population  and  growth  of  the 
towns  presented  them  on  a  scale  which  com- 
pelled investigation  in  conformity  with  the  ad- 
vance of  knowledge  and  the  rising  standard  of 
living.  It  is  important  to  understand  this.  .  .  . 
"As  to  housing,  we  have  Erasmus's  descrip- 
tion of  the  ordinary  abode  of  the  poorer  classes 
in  Henry  the  Eighth's  time.  It  was  a  cabin  of 
wood  and  clay,  consisting  of  a  single  room, 
shared  by  all  the  inmates  for  all  purposes  and 
also  by  animals ;  no  chimney ;  the  floor  of 
beaten  earth,  strewn  with  rushes,  which  were 
renewed  every  two  or  three  years,  and  mean- 
time  received    all   the   refuse   and    filth    both 

^  Dr.  Shadwell's  article  is,  among  other  things,  a  review 
of  Mr.  and  Mrs.  Hammond's  book.  The  Totvn  Labourer. 


134     THE   CASE    FOR   CAPITALISM 

human  and  animal.  This  type  of  dwelling  is 
not  yet  extinct.  ...  In  the  middle  ages, 
which  are  held  up  to  our  admiration,  it  was  the 
only  type  for  the  working  classes.  .  .  .  From 
time  to  time  complaints  were  made  of  over- 
building in  London,  and  houses  were  pulled 
down ;  and  attempts  were  made  to  clear  the 
streams  and  ditches,  which  were  blocked  with 
filth,  dead  animals,  offal,  and  every  kind  of 
refuse.  .  .  . 

"  We  get  a  glimpse  into  mediaeval  habits 
from  the  minute  inventory  of  Sir  John  Fastolfs 
furniture  at  Caister  Castle,  one  of  the  most 
sumptuous  mansions  in  the  kingdom.  Out  of 
twenty-six  bedrooms  only  one  —  my  lady's 
chamber — had  any  washing  utensils,  to  wit — 
*  I  basyn,  i  ewer,  2  pottys.'  All  the  world 
lived  in  a  state  of  indescribable  filth  down  to 
a  much  later  period.  False  generalizations  are 
drawn  from  the  beautiful  buildings  which  have 
come  down  to  us  from  old  times.  They  have 
survived  because  they  were  exceptional ;  the 
common  mass  have  perished.  People  who  do 
not  remember  conditions  thirty  or  forty  years 
ago  do  not  know  what  a  real  slum  is.  .  .  .  The 
plain  truth  is  that  the  old  towns  were  nothing 
but    slums — such    as    one    cannot    find    now. 


ACHIEVEMENTS  OF  CAPITALISM  135 

Kings  and  nobles  lived  in  a  state  of  stench 
which  would  be  thought  unendurable  to-day 
by  any  class,  so  greatly  has  the  standard 
changed.  .  .  . 

"  The  same  consideration  of  the  prevailing 
standard  applies  to  working  conditions  as  well 
as  to  housing  and  sanitation  under  the  new 
order.  .  .  . 

"The  alliance  of  ignorance  or  stupidity  with 
commercial  greed  runs  through  the  whole  story, 
and  it  is  clear  that  the  former  was  the  greater 
obstacle  of  the  two  to  improvement.  Intelli- 
gent employers  were  the  first  to  see  what  was 
wrong  and  to  readjust  their  ideas.  They  intro- 
duced new  standards,  which  gradually  gained 
approval  until  public  opinion  sanctioned  or 
demanded  their  compulsory  application.  In 
this  process  a  powerful  agent  was  combination 
among  workmen,  which  was  at  once  demanded 
and  rendered  possible  by  the  conditions  of 
work  and  the  massing  of  large  numbers 
together  in  the  industrial  towns.  The  same 
process  has  continued  ever  since,  and  is  still 
going  on  with  a  progressively  rising  standard 
of  living  and  working  conditions,  realized  in  a 
thousand  ways,  the  mere  enumeration  of  which 
would  occupy  pages.  .  .  . 


136     THE    CASE    FOR   CAPITALISM 

"  The  stranger  with  different  ideals   in  his 
mind  may  see  nothing  but  what  is  repellent  in 
the  modern  industrial  town,  and  wonder  how 
any  one  can  live  there.    But  the  inhabitants  do 
not  think  so  ;  they  are  attached  to  it,  warmly 
maintain    its   claims,   and   resent   depreciation. 
They  do  not  want  any  one's  pity,  and  they  have 
reason  ;  for  the  truth  is  that  they  enjoy  life  a 
great  deal  more  than  those  who  pity  them.  .  .  . 
Nor    is    it    true    that   they    take  no   pride  or 
interest  in   the  products  of  their  great  work- 
shops  and    factories,    such  as   the    mediaeval 
craftsman  took  in  his  handiwork.     Here  again 
a    false    balance    is    struck.      The   mediaeval 
craftsman  who  took  pride  in  his  work  is  the 
one   we   hear   of,    but   what    of    the    others  ? 
Were  there  no  idle  apprentices  ?     Was  there 
no  bad  work  ?     There  was  so  much  that  one 
of   the  chief  functions    of  the  Guilds   was   to 
prevent   and    punish    it  and    to    maintain    the 
standard,  which   was  always  being  threatened 
by  scamped  and  dishonest  work.     As  for  the 
theory  that  the  men  of  old  worked  for  use  and 
beauty,  not  for  profit,  there  never  was  a  greater 
craftsman  than  Benvenuto  Cellini,  or  one  who 
took  more  pride  in   his  work  and   its  beauty. 
Nor    is    there   a    workman    to-day  who  looks 


ACHIEVEMENTS  OFCAPITALISM  137 

more  keenly  after  his  wages  and  pockets  them 
with  more  satisfaction  than  Cellini  did  the  price 
of  his  masterpieces.  On  the  other  hand,  there 
is  to-day  a  great  deal  of  pride  among  workipen 
in  the  products  of  their  factory,  in  its  good 
name,  and  in  the  reputation  of  the  whole  town 
for  the  quality  of  its  manufactures.  Those  who 
do  not  know  this  have  never  been  among 
them. 

"  In  conclusion  these  observations  must  not 
be  taken  to  suggest  acquiescence  in  existing 
evils  or  denial  of  the  need  of  improvement. 
The  standard  is  always  rising  and  there  is  no 
finality.  But  truth  is  not  served  by  false 
balance-sheets,  selected  evidence,  and  one-sided 
statements." 

Thus  the  Middle  Ages  give  us  Beauty,  com- 
plicated by  stench  and  the  Black  Death. 
Capitalism  has  provided  an  enormously  greater 
output,  better  sanitation  and  better  houses  but 
has  not  yet  given  much  thought  to  Beauty.  It 
is  an  oversight  of  great  importance,  but  it  can 
be  repaired. 


CHAPTER   VII 

THE    RISKS    OF    STATE    SOCIALISM 

One  of  the  strongest  points  in  the  case  for 
Capitalism  is  the  doubt  that  all  candid  and 
unprejudiced  inquirers  must  feel  concerning 
the  practical  results  of  adopting  any  of  the 
proposed  alternatives.  And  on  this  subject 
doubt  is  enough.  Unless  we  can  be  definitely 
assured  that  we  are  going  to  secure  improve- 
ment it  would  be  madness  to  upset  our  whole 
economic  system,  especially  at  a  time  when 
the  whole  world  is  lacerated  and  impoverished 
and  has  to  work  hard  for  its  economic  recovery. 
If  and  when  general  prosperity  has  been 
secured,  we  may  be  justified  in  trying  fancy 
experiments.  But  there  never  was  a  time  in 
which  leaps  in  the  dark  were  more  untimely. 
Let  us  begin  with  Socialism,  now  commonly 
called  State  Socialism  to  distinguish  it  from 
the  Guild  Socialism  which  is  the  latest  fashion. 
Some   of    us    can    remember    the    time    when 

^38 


RISKS   OF   STATE    SOCIALISM     139 

Socialists  were  looked  upon  almost  as  outcasts 
by  "respectable"  folk,  partly  because  some  of 
them  had  a  habit  of  applying  the  acid  of  their 
criticisms  to  many  things  besides  the  economic 
structure  of  society,  such  as  the  marriage  laws 
and  established  forms  of  religion.  So  stuffy 
respectability  jumped  hastily  to  the  conclusion 
that  all  Socialists  were  atheists  and  advocates 
of  free  love.  After  passing  through  this  phase 
Socialism  became  quite  fashionable  for  a  time, 
and  then  having  been  laughed  at  as  a  dis- 
credited back-number  by  the  Guildsmen,  has 
come  back  into  the  limelight  owing  to  the 
craving  for  nationalization  which  is  cherished 
by  many  of  the  Labour  leaders. 

If  we  find  that  the  form  of  society  at  which 
Socialists  aim  is  somewhat  hazy  and  not  worked 
out  in  full  detail,  it  would  be  very  unfair 
therefore  to  criticise  Socialism  as  mere  rainbow 
chasing.  They  propose  to  rebuild  society,  and 
we  cannot  expect  them  to  prepare  for  us  a 
plan  of  the  whole  building  worked  out  in 
every  detail.  The  details  will  obviously  have 
to  be  filled  in  as  the  building  goes  on.  All 
that  we  can  expect  from  them  is  a  clear  state- 
ment of  the  main  principles  which  they  aim 
at  establishing,  and  the  advantages  which  they 


I40     THE    CASE    FOR   CAPITALISM 

expect  to  be  derived  from  their  establishment. 
Luckily  one  of  the  clearest  thinkers  on  the 
Socialist  side  published  just  before  the  war 
a  compact  handbook  showing  the  aims  of 
Socialism,  the  reasons  why  in  his  opinion  it 
ought  to  be  introduced,  and  the  benefits  which 
he  expected  to  accrue  from  it.  Mr.  Philip 
Snowden's  book  on  Socialism  and  Syndicalism^ 
though  there  is  no  date  upon  the  title-page, 
seems  to  have  appeared  in  191 3  or  later,  since 
it  contains  a  reference  to  the  election  of  the 
German  Reichstag  in  191 2.  This  authority 
tells  us  (page  107)  that  "so  far  as  it  is  possible 
to  express  the  aim  of  present-day  Socialism  in 
a  formula,  that  has  been  done  by  Dr.  Schaffle 
in  a  statement  which  will  be  accepted  by  all 
Socialists  as  a  reasonable  definition  of  their 
aims.  '  The  economic  quintessence  of  the 
Socialistic  programme,  the  real  aim  of  the  inter- 
national movement  is  as  follows : — To  replace 
the  system  of  private  capital  {i.  e.  the  specu- 
lative method  of  production,  regulated  on  behalf 
of  society  only  by  the  free  competition  of 
private  enterprises)  by  a  system  of  collective 
capital,  that  is,  by  a  method  of  production 
which  would  introduce  a  unified  (social  or 
collective)  organization  of  national  labour,  on 


RISKS    OF   STATE    SOCIALISM     141 

the  basis  of  collective  or  common  ownership 
of  the  means  of  production  by  all  the  members 
of  the  society.  This  collective  method  of  pro- 
duction would  remove  the  present  competitive 
system,  by  placing  under  official  administration 
such  departments  of  production  as  can  be 
managed  collectively  (socially  or  co-operatively), 
as  well  as  the  distribution  among  all  of  the 
common  produce  of  all,  according  to  the 
amount  and  social  utility  of  the  productive 
labour  of  each.' " 

It  will  be  noted  that  according  to  Schaffle's 
definition,  adopted  by  Mr.  Snowden,  and 
accepted,  according  to  him,  by  all  Socialists, 
the  common  produce  of  all  is  to  be  distributed 
under  official  administration  according  to  the 
amount  and  social  utility  of  the  productive 
labour  of  each.  It  appears  from  this  passage 
that  the  wage-earner  under  Socialism  is  going 
to  be  paid  according  to  the  amount  and  social 
utility,  whatever  that  may  mean,  of  the  work 
which  he  does.  This  very  important  item  in 
the  Socialist  programme  is  also  adopted  and 
clearly  expressed  by  Mr.  Ramsay  Macdonald 
on  pages  122  and  123  of  his  book  on  The 
Socialist  Movement,  one  of  the  volumes  of  the 
Home  University  series.     Mr.  Macdonald  tells 


142     THE    CASE    FOR   CAPITALISM 

us  that  it  is   a  mistake  to  confuse  Socialism 
with  Communism. 

"Communism  presupposes  a  common  store 
of  wealth  which  is  to  be  drawn  upon  by  the 
individual  consumer  not  in  accordance  with 
services  rendered,  but  in  response  to  '  a  human 
right  to  sustenance.'  It  may  be  in  accordance 
with  Communist  principles  to  make  this  right 
to  consume  depend  upon  the  duty  of  helping 
to  produce,  and  to  exile  from  the  economic 
community  every  one  who  declines  to  fulfil  that 
duty.  Some  Communists  insist  that  one  of 
the  certain  results  of  their  system  will  be  the 
creation  of  so  much  moral  robustness  that  in 
practice  this  question  will  never  arise  for  actual 
answer.  But  be  that  as  it  may,  the  distribu- 
tive philosophy  of  Communism  is  as  I  have 
stated,  and  it  contains  the  difference  between 
that  system  and  Socialism.  '  From  all  accord- 
ing to  their  ability  ;  to  each  according  to  his 
needs '  is  a  Communist,  not  a  Socialist  formula. 
The  Socialist  would  insert  'services' for  'needs.' 
They  both  agree  about  the  common  stock ; 
they  disagree  regarding  the  nature  of  what 
should  be  the  effective  claim  of  the  individual 
to  share  in  it.  Socialists  think  of  distribution 
through    the    channels    of    personal    income ; 


RISKS   OF   STATE   SOCIALISM     143 

Communists  think  of  distribution  through  the 
channels  of  human  rights  to  live.  Hence 
Socialism  requires  some  medium  of  exchange 
whether  it  is  pounds  sterling  or  labour  notes  ; 
Communism  requires  no  such  medium  of  ex- 
change. The  difference  can  best  be  illustrated 
if  we  remember  the  difference  between  a  cus- 
tomer going  to  a  grocer  and  buying  sugar, 
and  the  child  of  the  family  claiming  a  share 
of  that  sugar  the  next  morning  at  the  breakfast 
table.  Or  the  position  may  be  stated  in  this 
way :  Socialism  accepts  the  idea  of  income, 
subject  to  two  safeguards.  It  must  be  adequate 
to  afford  a  satisfactory  standard  of  life,  and  it 
must  represent  services  given  and  not  merely 
a  power  to  exploit  the  labour  of  others." 

It  thus  appears  that  the  economic  freedom 
which  modern  reformers  are  groping  after  will 
be  under  Socialism  different  only  in  kind  from 
the  economic  freedom  which  is  nowadays  pos- 
sessed. In  this  respect  a  difference  in  kind 
may  be  of  the  highest  possible  importance, 
because  we  have  already  recognized  that  com- 
plete economic  freedom  is  impossible  to  any- 
body in  a  state  of  nature,  since  under  natural 
conditions  everybody  must  do  more  or  less 
work  in  order  to  live,  and  is  impossible  to  the 


T44     THE   CASE    FOR   CAPITALISM 

great  majority  under  society  as  at  present  organ- 
ized. As  things  are  at  present,  all  the  workers 
of  the  world  have  to  work  in  order  to  provide 
something  which  the  consuming  public  wants, 
generally  under  the  management  of  an  employer 
who  organizes  the  particular  enterprise  in  which 
that  work  is  done,  with  the  exception  of  a  few 
professional  men  who  work  directly  for  their 
consuming  customers.  The  wage-earner  works 
under  an  employer  in  a  factory,  mine  or  railway 
for  the  consuming  public  ;  the  journalist  works 
under  a  newspaper  proprietor  for  a  reading 
public.  The  variety  entertainment  artist  works 
under  a  theatrical  or  music-hall  proprietor  for 
the  public  that  is  trying  to  amuse  itself.  The 
author  works  under  a  publishing  employer  for 
a  public  which  he  hopes  may  be  going  to  read 
his  books.  Under  Socialism,  instead  of  work- 
ing under  a  proprietor  employer  for  the 
consuming  public,  the  worker  would  work 
under  official  administrators  for  the  consuming 
public. 

But  there  would  be  two  great  differences. 
Under  official  administration  the  consuming 
public  would  have  to  take  what  it  could  get,  since 
owing  to  the  abolition  of  competition,  it  would 
have    no   chance  of  exercising   choice    in   the 


RISKS   OF   STATE    SOCIALISM     145 

matter  of  goods  and  services  which  it  would 
consume  ;  and  the  worker,  instead  of  working 
to  put  profit  into  the  pockets  of  a  proprietor 
employer,  would  be  working  to  supply  the 
general  consumption,  as  organized,  directed 
and  controlled  by  official  administrators. 

He  would  have  no  more  freedom,  in  fact  he 
would  have  less,  because  owing  to  the  cessation 
of  competition  and  the  concentration  of  the 
whole  organization  of  industry  in  official  hands, 
he  would  have  no  power  of  exercising  choice 
between  one  employer  and  another.  Never- 
theless it  is  possible  that  the  fact  that  he  is 
working  for  the  general  consumer,  without  the 
intervention  of  a  profit-making  capitalist,  might 
give  him  a  feeling  of  satisfaction  which  would 
very  much  more  than  balance  his  loss  of  choice 
between  one  employer  and  another ;  while  at 
the  same  time  the  fact  that  the  official  adminis- 
tration would,  by  a  democratic  organization  of 
society,  be  to  a  certain  extent  based  upon  the 
wishes  and  ideals  of  himself  and  his  fellows, 
might  enable  him  to  believe  that  he  was  really 
only  working  for  himself,  and  therefore  give 
him  that  sense  of  freedom  which  is  nearly  as 
good  as  its  actual  possession. 

The    Socialistic  artisan  working  in  a    State 


146    THE   CASE    FOR  CAPITALISM 

boot  factory  would  no  longer  be  dissatisfied 
because  the  harder  he  worked  the  more  profit 
he  was  going  to  put  into  the  pocket  of  his 
employer,  without  doing  any  good  to  himself, 
unless  he  were  able  to  secure  an  increase  in 
wages.  He  might  feel  that  the  harder  he 
worked  the  more  boots  he  would  be  turning 
out  for  the  benefit  of  the  other  members  of 
society,  and  that  his  efforts  would  be  compen- 
sated by  similar  efforts  being  made  by  all  his 
brethren  who  were  working  in  other  industries 
for  the  good  of  himself  and  other  consumers. 
If  he  had  not  attained  economic  freedom,  which 
is  impossible  for  humanity  until  we  have  arrived 
at  the  point  when  all  the  needs  of  life  can  be 
served  by  automatic  machinery,  he  might  have 
arrived  at  a  state  of  things  in  which  the  condi- 
tions of  his  work  were  so  entirely  different  from 
what  they  are  at  present,  that  he  would  work 
hard  for  the  joy  of  the  thing,  because  he  knew 
that  he  was  helping  everybody  else,  and  that 
everybody  else  was  working  hard  to  help  him. 
If  such  a  state  of  things  could  really  be  brought 
about,  it  is  clear  that  the  gain  would  be  enor- 
mous. Instead  of  restricting  output  so  as  not 
to  "  use  up  the  amount  of  work  that  wants 
doing,"  every  worker  would  work  as  hard  as  he 


RISKS   OF   STATE    SOCIALISM     147 

could.  He  would  welcome  the  introduction 
of  labour-saving  machinery,  because  it  would 
lighten  his  task  and  that  of  everybody  else,  and 
it  might  quite  possibly  be  true  that  the  difterent 
spirit  in  which  industry  would  be  managed 
might  lead  to  a  very  great  increase  in  output. 

All  this  looks  very  nice,  but  would  it  be  likely 
to  happen  ?  We  have  seen,  according  to 
Mr.  Snowden,  workers  would  be  paid,  under 
Socialism,  according  to  the  amount  and  social 
utility  of  the  productive  labour  of  each.  This 
clearly  implies  a  differential  scale  of  wages, 
based  on  piece-work  in  order  to  gauge  the 
amount,  and  on  the  decision  of  somebody,  or 
some  Committee,  concerning  the  social  utility 
of  the  labour  of  each.  It  may  be  that  the 
strong  prejudice  against  piece-work,  now  com- 
monly said  to  be  cherished  by  trade  unionists, 
might  not  survive  under  Socialism,  but  this  is 
by  no  means  certain.  The  differential  scale 
according  to  the  amount  of  work  done,  would 
involve  difficulties  of  measurement  and  would 
very  probably  produce  jealousy  and  friction, 
and  the  question  of  social  utility  seems  to  open 
up  endless  possibilities  of  dispute  and  differ- 
ences. If  we  could  be  sure  that,  as  many 
Socialists  seem  to  assume,  a  radical  change  in 


148     THE   CASE    FOR   CAPITALISM 

the  natine  of  all  of  us  would  be  wrought  in  the 
twinkling  of  an  eye  because  we  found  ourselves 
members  of  a  Socialist  State,  those  details 
might  not  lead  to  disaster.  But  natura  nihil 
facit  per  saltu77i — nature  does  nothing  with  a 
jump.  For  some  time  to  come  we  should  con- 
tinue to  be  human  beings — "  most  remarkable 
like  you  "  and  me — and  it  is  only  too  probable 
that  the  jealousy  between  one  Trade  Union 
and  another,  which  is  so  often  a  cause  of 
industrial  strife  and  discord,  might  be  renewed, 
under  Socialism,  in  the  shape  of  acute  differ- 
ences between  the  workers  on  the  question  of 
the  wages  paid  to  themselves  and  others.  With 
the  best  goodwill  in  the  world  of  all  parties  the 
problem  of  social  utility  as  between  the  work  of 
a  coal-miner,  a  bootmaker  and  a  platelayer, 
would  be  hard  to  settle  ;  and  if  instead  of  a 
universal  smile  of  goodwill  there  were  the  old 
natural  desire  on  the  part  of  each  man  to  do  the 
best  for  himself,  the  industrial  strife  of  to-day 
mic;ht  be  reproduced  on  an  extended  and  much 
more  uncomfortable  scale. 

Because  under  Socialism  there  would  be  no 
mediator  in  the  shape  of  the  State  or  public 
opinion.  The  State  would  be  the  employer 
and  a  party  in  the  quarrel,  and  nearly  all  the 


RISKS   OF    STATE    SOCIALISM     149 

public  would  be  liable  at  any  time  to  be  directly 
interested  in  similar  disputes  and  so  would  be 
unable  to  approach  them  with  the  detachment 
which  is  so  necessary  to  impartiality.  Mr. 
Snowden,  following  Schaffle,  does  not  propose 
that  all  private  enterprises  shall  be  abolished 
under  Socialism,  but  he  does,  as  will  be  shown 
later,  lay  down  conditions  which  seem  most 
likely  to  abolish  it.  So  that  whenever  there  is 
a  quarrel  between  any  workers  and  the  State, 
all  the  other  workers  who,  with  their  depend- 
ents, will  be  all  the  community  except  the 
ruling  bureaucrats,  will  feel  that  it  might  be 
their  turn  next. 

But  even  if  all  these  difficulties  were  over- 
come and  the  workers  worked  with  an  enlhu- 
siasm  and  success  that  profit-making  employers 
have  so  far  failed  to  secure  from  their  efforts, 
we  are  still  faced  by  the  very  serious  doubt  as 
to  the  efficiency  of  official  management.  Ready 
work  by  the  rank  and  file  is  of  little  or  no  use 
if  it  is  ill  directed,  and  if  those  responsible  for 
leadership  are  not  always  eager  to  adopt  new 
methods  and  to  take  risks  by  trying  experi- 
ments which  may  cost  them,  or  somebody  else, 
dear  in  case  of  failure.  We  have  to  remember 
that  in  order  to  make  the  world  that  we  want,  a 


I50    THE   CASE   FOR   CAPITALISM 

great  increase  in  output,  as  was  shown  in  Chap- 
ter I,  is  necessary.  If  every  man,  woman  and 
child  in  the  country  is  to  have  a  real  chance  of 
a  real  life,  it  is  not  enough  to  do  about  as 
well  as  we  did,  with  a  power  of  consumption 
measured  at  about  j£42  (pre-war)  per  head  of 
the  population,  according  to  the  highest  esti- 
mate. We  have  to  go  ahead  rapidly.  Are  we 
as  likely  to  do  so  under  bureaucratic  manage- 
ment as  under  private  enterprise,  with  the 
incentive  of  profit  before  it,  tempting  and  spur- 
ring it  to  make  experiments  and  take  risks? 
Are  we  not  much  more  likely  to  fall  into  a  slough 
in  which  movement  is  much  more  difficult 
because  those  who  would  have  to  initiate  new 
departures  would  get  little  or  no  reward  if  they 
succeeded,  but  would  be  liable  to  criticism  and 
blame  if  they  failed  ? 

Those  who  oppose  nationalization  of  industry 
on  this  ground,  that  it  would  be  most  unlikely 
to  secure  the  adaptability  and  enterprise  that 
are  necessary  to  progress,  are  sometimes  accused 
of  "attacking  Government  officials."  I  hope 
that  as  far  as  I  am  concerned  there  is  no  truth 
in  this  charge.  Having  had  the  honour  of 
being,  for  a  short  time,  a  Government  official, 
I  can  testify  from  personal  knowledge  to  the 


RISKS   OF   STATE    SOCIALISM     151 

great  store  of  ability  that  is  to  be  found  in  our 
Government  offices — this  goes  without  saying, 
oceing  that  the  intellectual  flower  of  our  Uni- 
versity youths  used  to  go  year  by  year  into  the 
Civil  Service — and  also  to  the  devotion  with 
which,  at  least  during  the  war,  they  overworked 
themselves  into  pulp.  In  the  matter  of  ability 
and  hard  work  our  officials  are  unsurpassed  if 
not  unrivalled.  And  yet,  owing  to  some  fault 
in  the  system,  even  before  the  war,  the  net 
result  of  their  efforts  was  the  subject  of  much 
criticism.  And  it  is  putting  it  mildly  to  say 
that  the  experience  of  Government  manage- 
ment and  control  during  the  war  does  not  at  all 
encourage  one  to  expect  that  any  Government 
which  it  would  now  be  possible  to  call  into 
existence  could  deal  with  the  tremendous  task 
of  organizing  the  nation's  economic  activities 
with  any  approach  to  success. 

This  experience  must  not  tempt  us  to  be  too 
certain  about  future  possibilities.  We  may  be 
able  to  create  some  day  a  bureaucracy  which 
shall  be  efficient,  intelligent  and  economical  in 
the  best  sense  of  the  word.  It  is  not  much 
more  than  a  century  since  Adam  Smith  in  com- 
paring the  possibilities  of  jomt-stock  enterprise 
with    private  activity,  decided  that  joint-stock 


152     THE   CASE    FOR   CAPITALISM 

enterprises  owing  to  want  of  adaptability  and 
elasticity  could  only  compete  with  private 
enterprise  in  businesses  such  as  banking  and 
transport,  which  could  be  conducted  more  or 
less  in  accordance  with  routine.  It  is  true 
that  in  those  departments  which  Adam  Smith 
marked  out  as  the  special  province  of  joint- 
stock  companies,  joint-stock  enterprise  has  won 
some  of  its  greatest  triumphs,  but  it  is  also  true 
that  it  has  driven  the  private  undertaker  out  of 
many  other  fields  of  activity  in  which  he  has 
expected  to  be  victorious,  and  that  even  in  such 
matters  as  retail  shopkeeping,  the  joint-stock 
company  is  rapidly  establishing  itself  as  the 
dominant  force.  As  joint-stock  enterprise  has 
grown  and  improved  itself,  it  is  quite  possible 
that  State  enterprise  worked  by  official  adminis- 
tration might  do  likewise.  But  when  we  have 
made  the  fullest  allowances  for  what  the  State 
might  or  might  not  be  able  to  do  some  day,  the 
fact  remains  that  at  the  present  crisis  we  have 
no  right  to  gamble  on  possibilities.  As  things 
are  at  present,  it  seems  most  probable  that  it 
would  be  economically  disastrous  to  hand  over 
the  whole  productive  power  of  society  to 
officials.  The  mere  hugeness  of  the  scale  on 
which  things  would  have  to  be  done  must,  until 


RISKS   OF   STATE    SOCIALISM     153 

we  have  bred  a  race  of  supermen,  lead  to 
cumbersome  and  tardy  management.  It  is 
said  that  some  of  the  big  industrial  amalga- 
mations, and  also  their  smaller  competitors,  are 
beginning  to  find  that  size,  after  a  point,  brings 
weakness. 

We  are  not  justified  in  drawing  too  decided 
inferences  from  what  has  happened  during  the 
late  war.  Government  control  has  unquestion- 
ably exasperated,  not  only  the  employers  and 
organizers  of  industry,  but  the  great  majority 
of  the  working  classes,  and  the  great  majority 
of  the  consumers,  but  then  we  must  remember 
that  Government  control  has  had  to  undertake 
a  task  for  which  we  had  previously  done  our 
best  to  make  it  unfit  for  something  more  than 
a  century,  by  telling  the  Government  to  do  as 
little  as  possible  in  the  matter  of  controlling 
industry.  It  is  true  that  the  post  office,  which 
has  many  years  behind  it  of  experience  and 
practice  in  conducting  an  important  enterprise, 
showed  great  lack  of  adaptability  during  the 
war.  It  took  nearly  two  years  to  induce  it  to 
bring  home  to  the  nation  the  need  for  putting 
its  money  into  war  bonds  by  the  use  of  a  post- 
mark stamp  on  envelopes,  and  the  manner  in 
which  it  handled  the   selling  of  War   Saving 


154     THE    CASE    FOR   CAPITALISM 

Certificates  and  the  various  forms  of  Govern- 
ment securities  which  have  been  issued  through 
it  was  a  cause  of  much  complaint.  But  here 
again  we  must  remember  that  owing  to  the 
claims  of  the  recruiting  sergeant  and  the  con- 
scription officer,  the  post  office  lost  many  of 
its  best  workers  at  a  time  when  the  work  thrown 
upon  it  was  greatly  increased. 

More  serious  in  its  immediate  practical  effect 
was  the  competition  between  one  Government 
office  and  another  for  the  goods  and  services 
which  they  required.  Attention  was  called  in 
the  fourth,  year  of  the  war  to  this  form  of 
extravagance  in  a  Report  of  the  National 
Expenditure  Committee.  It  does  seem  aston- 
ishing that  Government  offices  should  not  by 
that  time  have  evolved  some  better  system  than 
going  into  the  market  against  one  another, 
raising  the  cost  of  their  administration  and 
impairing  their  efficiency.  Unfortunately  this 
fault  was  probably  only  a  symptom  of  inter- 
departmental jealousy,  the  extent  of  which  is 
almost  incredible  to  those  who  have  not  been 
brought  face  to  face  with  it,  and  caused  some 
cynics  to  maintain  that  during  the  war  the 
departments  were  much  more  eager  to  win 
victories  over  one  another  than  to  defeat  the 


RISKS   OF    STATE   SOCIALISM     155 

Germans.  If  these  things  could  happen  at  a 
time  when  the  nation's  existence  was  in  jeo- 
pardy, anything  Hke  good  team  work  between 
the  departments  for  the  furtherance  of  industry 
in  normal  times  seems  to  be  a  very  remote 
aspiration. 

But  when  we  dwell  upon  all  the  evils  of 
Government  control  that  have  been  evident 
during  the  war — extravagance,  friction  between 
one  department  and  another,  changes  of  policy 
which  have  involved  enormous  waste,  and  an 
attitude  towards  labour  which  has  cost  the 
country  millions  in  the  payment  of  wages, 
while  only  increasing  discontent  and  unrest 
among  those  who  thought  that  they  were  not 
being  paid  enough — we  have  to  remember  that 
the  advocates  of  nationalization  have  a  good 
deal  to  say  on  the  other  side. 

There  is  no  doubt  that  the  Government  was 
able,  by  inquiry  into  costs  of  production,  and 
by  centralizing  production  on  a  great  scale,  to 
effect  most  valuable  economies  in  the  price  of 
shells  and  other  munitions.  On  the  other  hand, 
the  industrial  problem  that  it  had  to  face  was  a 
very  simple  one  as  compared  with  that  which 
is  before  the  producer  in  ordinary  times.  The 
Government  knew  that  all  that  it  had  to  do  was 


156     THE    CASE    FOR   CAPITALISM 

to  turn  out  as  much  of  these  articles  as  its 
available  resources  allowed.  There  was  no 
question  of  turning  out  too  much  or  of  not 
finding  a  buyer  at  a  price  that  would  repay 
the  capital  and  energy  put  into  the  work,  and 
so  nearly  all  the  difficulties  which  call  for  skill, 
experience,  judgment  and  courage  in  ordinary 
industry  were  eliminated  for  it.  Any  manu- 
facturer who  was  told  that  he  had  a  certain 
market  for  the  whole  amount  of  any  particular 
product  that  he  could  turn  out,  and  could  call 
upon  the  whole  resources  of  the  nation  to 
provide  him  with  raw  material  and  labour, 
could  bring  down  the  price  of  it  to  an  astonish- 
ing extent  without  loss. 

But  after  all,  all  these  arguments  from  what 
happened  during  the  war  have  to  be  used  with 
great  caution,  because  the  whole  state  of  affairs 
was  artificial.  Extreme  urgency  was  the  cause 
and  justification  of  much  extravagance  that 
seemed  to  be  appalling,  while  on  the  other  hand 
the  spirit  of  the  nation  and  the  eagerness  of  all 
classes  to  meet  the  crisis  put  advantages  into 
the  hands  of  the  Government  of  which  it  might 
have  been  expected  to  have  made  much  more 
profitable  use.  Many  pages  could  be  covered 
with  a  record  of  the  blunders  and  absurdities 


RISKS   OF   STATE   SOCIALISM     157 

perpetrated  by  Government  departments  during 
the  war,  but  it  is  enough  for  our  present  purpose 
to  observe  that  the  war's  experience  has  cer- 
tainly increased  the  doubt  that  one  feels  con- 
cerning the  efficiency  of  Government  control 
of  industry. 

It  is  a  perpetual  puzzle  to  those  who  know 
from  what  a  brilliant  class  of  young  men  the 
Government  officials  were  recruited,  and  have 
seen  the  untiring  zeal  with  which  they  do  their 
work,  to  account  for  the  unsatisfactory  results 
which  were  produced  by  them  both  before  and 
after  the  war.  Take  a  recent  example  arising 
out  of  the  introduction  of  rabies  into  England. 
If  there  was  one  thing  which  our  officials  might 
have  been  expected  to  tackle  with  all  the 
effectiveness  of  which  they  were  capable,  it 
was  the  protection  of  the  citizens  from  the 
horrible  death  with  which  the  outbreak  of  rabies 
menaced  them.  How  the  Board  of  Agriculture 
dealt  with  it  is  shown  in  the  following  extracts 
from  a  letter  signed,  "  An  old  Soldier  in  Wales," 
published  in  the  Times  of  July  i,  191 9  : — 

"On  Monday  last  I  was  bitten  by  a  stray  cur 
on  the  main  road  here,  both  its  condition  and 
behaviour  beincr  such  as  to  arouse  the  "-ravest 
suspicion  in  any  one  who  has,  like  myself,  seen 


158     THE   CASE    FOR   CAPITALISM 

not  a  few  cases  of  rabies  in  dogs.  I  hurried  off 
by  motor  to  my  doctor,  who  dressed  the  wound, 
and  certified  his  opinion  that  the  dog  should  be 
destroyed,  and  the  head  sent  for  examination, 
to  see  if  it  were  infected  with  rabies.  The 
police-station — we  went  to  report — was  empty, 
but  late  that  evening  the  doctor  motored  out  to 
me  with  a  brochure  issued  by  the  Board  of 
Agriculture  on  this  subject,  obtained  from  the 
police  ;  it  contained  very  precise  rules  of  pro- 
cedure for  various  subordinate  officials,  and 
very  minute  instructions  for  the  proper  sepulture 
of  a  rabid  dog,  but,  on  a  cursory  examination, 
revealed  nothing  applying  to  a  person  bitten, 
or  a  doctor  treating  him,  or  as  to  the  means  to 
be  taken  to  secure  a  certain  diagnosis. 

"It  did,  however,  say  that  a  telegram  was  to 
be  sent,  by  some  official,  to  this  Board,  and, 
to  avoid  inordinate  delay,  it  was  decided  that 
I  had  better  myself  telegraph  to  them.  On 
Tuesday  morning  I  did  this,  giving  the  doctor's 
opinion,  and  asking  where  the  head  should  be 
sent.  On  Wednesday  evening,  having  received 
no  reply,  I  wrote  to  the  secretary  of  the  Board, 
giving  full  details,  stating  that  the  owner  of  the 
dog  consented  to  its  destruction,  and  urgently 
asking   where    I    could   send    the    head.      On 


RISKS   OF  STATE   SOCIALISM     159 

Thursday,  evidently  after  the  receipt  of  this 
letter,  I  got,  the  only  reply  vouched,  this  tele- 
gram— '  If  rabies  suspected  intimation  should 
be  given  to  the  police.'  On  Friday,  as  a 
result  of  doing  so,  I  was  visited  by  a  fine 
specimen  of  the  thick-headed  rural  constable, 
with  written  instructions  '  to  inquire  into  my 
complaint  against  the  owner  of  a  savage 
dog  • ! 

"  To-day,  Saturday,  my  doctor  is  telegraphing 
elsewhere  for  the  information  denied  us  by  the 
Board,  but  it  will  be  Monday  before  the  head 
can  be  sent,  and  probably  a  fortnight  from  the 
date  of  the  bite  before  the  result  can  be  known, 
and  then,  if  unfavourable,  three  weeks  before  I 
could  get  to  Paris  for  treatment." 

Such  were  the  methods  applied  by  brilliant 
and  devoted  Government  officials  to  a  com- 
paratively simple  though  enormously  important 
problem.  Would  they  have  good  results  if 
applied  to  industry  and  production  ? 

Finally  before  we  leave  the  question  of 
Government  control  a  word  has  to  be  said 
concerning  the  contention  of  many  Socialists 
that  workers  would  work  cheerfully,  contentedly 
and  well  for  the  community,  and  that  industrial 
friction  would  be  practically  abolished.     This 


i6o    THE    CASE    FOR   CAPITALISM 

theory  has  been  blown  into  bits  by  the  railway 
strike  of  last  September.  The  railways  were 
in  the  hands  of  the  Government,  which  was 
paying  a  fixed  rate  for  their  use  to  their  pro- 
prietors, and  yet  the  railwaymen  declared  a 
lightning  strike  which  inflicted  untold  hardship 
almost  entirely  upon  the  poorer  classes.  They 
had,  in  my  opinion,  a  very  genuine  grievance, 
but  it  could  not  affect  them  for  six  months,  yet 
such  was  the  action  that  they  thought  fit  to  take 
when  working  for  the  Government. 

It  will  also  be  remembered  that  the  Prime 
Minister  when  he  announced  that  the  Govern- 
ment did  not  intend  to  adopt  Mr.Justice  Sankey's 
recommendation  that  the  coal-mining  industry 
should  be  nationalized  laid  stress  on  this  aspect 
of  the  question.  Mr.  Justice  Sankey's  recom- 
mendation had  been  based  upon  the  hope  that 
nationalization  would  tend  to  smooth  the  relations 
between  the  workers  and  their  employer,  but 
Mr.  Duncan  Graham,  M.P.,  a  mining  leader, 
had  declared  at  a  conference  of  the  National 
Union  of  the  Scottish  Mine-Workers,  "that  if  the 
mines  became  the  property  of  the  nation  the 
miners  would  need  to  be  more  determined  than 
ever  in  their  policy  and  more  vigorous  in  the 
Trade   Union  organization   because  instead  of 


RISKS   OF   STATE   SOCIALISM     i6i 

fighting  local  employers  they  would  be  fighting 
the  Government."^ 

If  Government  control  is  only  to  mean  harder 
fighting  between  Labour  and  its  employer,  there 
is  a  sweet  prospect  ahead  of  the  Socialistic 
State. 

A  similar  lesson  can  be  learnt  from  the 
experience  of  municipal  enterprise  in  the  report 
of  the  conference  between  the  Prime  Minister 
and  the  miners'  leaders  on  the  subject  of 
the  nationalization  of  coal-mines.  The  Prime 
Minister  was  reported  as  saying : — 

"  Municipalities  in  their  communal  ownership 
own  gigantic  industries,  but  I  do  not  think  you 
can  point  to  a  single  case  where  it  can  be  said 
that  workmen  working  for  the  commune,  either 
the  local  commune  or  the  national  one,  work 
more  heartily,  work  harder,  or  increase  the 
output  in  comparison  with  their  fellows  who 
are  working  for  a  syndicate — not  one." 

Whereupon  Mr.  Smillie  replied,  "  Yes,  the 
Glasgow  trams  are.  They  work  more  loyally." 
Mr.  W.  E.  Treir,  editor  of  the  Electric  Railway 
and  Tramway  Journal,  wrote  a  letter  that  was 
printed  in  the  Times  of  October  17,  19 19,  in 
which  he  stated  that  the  above-quoted  passage 

^  Times,  August  15,  1919. 


i62     THE   CASE    FOR   CAPITALISM 

had  led  him  to  analyse  the  records  of  strikes 
published  in  his  journal  during  the  twelve 
months  ended  June  30,  19 19,  in  order  to 
ascertain  whether  there  were  more  strikes  or 
fewer  on  British  municipal  or  on  company- 
operated  tramways  during  that  period,  and  that 
he  had  found  that  there  had  been  twelve  on 
municipally-owned  and  operated  tramways, 
including  Glasgow,  and  on  company  operated 
tramways  four.  He  added,  however,  that  "  the 
fact  that  in  the  United  Kingdom  municipally- 
operated  tramways  are  much  more  numerous 
than  company  tramways  has  some  bearing  on 
the  figures,  but  does  not  affect  the  argument 
put  forward  by  Mr.  Smillie." 

As  to  the  method  by  which  Socialism  is  to 
be  arrived  at,  Mr.  Snowden  tells  us  that  there 
is  no  dispute.  "All  Socialists,"  he  tells  us  on 
page  138  of  his  book,  "  are  now  agreed  that  the 
economic  changes  which  are  aimed  at  must  be 
brought  about  by  political  action.  Mr.  Sidney 
Webb  says  there  can  be  no  doubt  that  the 
progress  towards  Socialism  will  be,  (1)  Demo- 
cratic— that  is,  prepared  for  in  the  minds  of 
people  and  accepted  by  them  ;  (2)  Gradual — 
causing  no  dislocation  of  industry  however 
rapid   the   progress   may  be  ;    (3)  Moral — that 


RISKS   OF   STATE   SOCIALISM     163 

is,  not  regarded  by  the  sense  of  the  community 
as  being  immoral ;  (4)  Constitutional — that  is, 
by  legal  enactment  sanctioned  by  a  democratic 
Parliament." 

He  then  quotes,  with  disapproval,  Mr. 
Arthur  Balfour,  who  had  stated  in  a  speech  at 
Birmingham  in  1907  that  "Socialism  has  one 
meaning  only.  Socialism  means,  and  can  mean 
nothing  else  than  that  the  community  or  State 
is  to  take  all  the  means  of  production  into  its 
own  hands,  that  private  enterprise  and  private 
property  are  to  come  to  an  end,  and  all  that 
private  enterprise  and  private  property  carry 
with  them." 

Mr.  Snowden  thinks  that  this  definition  "is 
not  an  accurate  and  precise  statement  of  the 
aims  of  present-day  Socialism.  .  .  .  Socialism 
only  proposes  to  make  such  of  the  means  of 
production  into  public  property  as  can  be 
conveniently  and  advantageously  owned  and 
controlled  by  the  community.  ...  If  private 
enterprise  can  carry  on  any  productive  works, 
or  conduct  any  public  service  better  than  the 
community  can  do  it,  a  Socialist  State  might 
certainly  be  trusted  to  encourage  that  form  of 
enterprise  which  would  bring  the  best  results 
to  the  community.  ,  ,   .   But  whatever  private 


i64    THE   CASE    FOR  CAPITALISM 

production  or  voluntary  enterprise  does  exist  in 
the  Socialist  State  will  not  be  private  capitalism. 
Capitalism  means  capital  employed  for  the 
purpose  of  appropriating  profit  or  surplus  value. 
There  can  be  no  Socialist  State  in  which  the 
exploitation  of  labour  for  the  profit  of  others  is 
allowed.  There  can  be  no  Socialist  State  where 
economic  rent  is  appropriated  by  monopolists. 
The  reason  why  Socialists  aim  at  the  control 
and  ownership  of  land  and  capital  is  because, 
generally  speaking,  that  is  the  only  way  in 
which  rent,  interest  and  profit  can  be  secured 
for  the  community,  and  also  because,  generally 
speaking,  the  community  can  work  a  concern 
or  public  service  m.ore  economically  and 
efficiently  than  private  enterprise  can  do  it." 
This  latter  assumption  is  by  no  means 
borne  out  by  such  examples  as  the  manage- 
ment by  the  post  office  of  the  telegraphs 
and  telephones.  And  if,  as  Mr.  Snowden 
seems  to  indicate,  no  private  production  or 
voluntary  enterprise  in  the  Socialist  State 
would  be  allowed  to  earn  a  profit,  it  would 
seem  that  all  the  means  of  production  are 
likely  to  be  transferred  to  the  State,  unless 
human  nature  were  radically  altered,  since  no 
one  else  would  have  any  incentive  for  making 


RISKS   OF   STATE   SOCIALISM     165 

use  of  them.  And  in  that  case,  Mr.  Balfour's 
view  that  private  enterprise  and  private  property 
would  necessarily  come  to  an  end,  would  clearly 
be  correct.  And  Mr.  Balfour's  reading  of  the 
meaning  of  Socialism,  rather  than  Mr.  Snow- 
den's,  is  borne  out  by  a  speech  made  by  Mr. 
Tom  Shaw,  M.P.,  at  the  Trade  Union  Congress 
of  September  1919.  **  If,"  he  said,  "Socialism 
means  anything,  it  means  the  nationalization 
of  the  means  of  production,  distribution  and 
exchange,  and  their  administration  by  the 
whole  nation  for  the  good  of  the  whole  nation." 
He  seemed  to  recognize  no  exceptions. 

Among  practical  steps  to  be  taken  towards 
the  establishment  of  Socialism  Mr.  Snowden 
enumerated  an  eight-hour  working  day,  a 
minimum  wage  for  all  adult  workers,  complete 
provision  against  sickness,  free  education  for 
all  children  at  the  primary,  secondary  and  tech- 
nical schools,  adequate  provision  for  all  aged 
and  infirm  persons,  and  other  reforms  aimed  at 
the  raising  of  the  general  standard  of  the  workers' 
life.  Also  "demands  for  the  abolition  of  in- 
direct taxation  and  the  gradual  transference  of 
all  public  burdens  on  to  unearned  incomes,  with 
the  view  to  their  ultimate  extinction."  He 
further  advocated  the  organization  of  schemes 


i66     THE   CASE    FOR   CAPITALISM 

for  the  unemployed  or  the  maintenance  of  the 
unemployed  by  the  taxation  of  surplus  value, 
so  that  workmen  may  be  relieved  from  vieing 
against  each  other  for  employment,  and  as  a 
means  to  that  end  he  tells  us  that  "  Socialists 
demand  that  the  State  shall  embark  upon 
schemes  of  national  development,  such  as  the 
improvement  of  roads,  harbours,  waterways, 
and  the  afforestation  of  suitable  wastes.  They 
also  suggest  that  the  policy  of  agricultural 
holdings  for  the  labourers  shall  be  extended, 
and  that  help  shall  be  given  by  the  State 
in  the  form  of  encouraging  co-operative  effort 
among  these  State  tenants,  with  the  assistance 
of  State  capital."' 

Municipal  enterprise  might  "  start  competitive 
enterprises  in  house  building,  fire  insurance, 
coal  supply,  milk  supply,  bakeries,  refreshment 
houses,  stores  and  the  like,"  and  "the  national- 
ization of  land,  mines,  railways  and  other  means 
of  transport  would  be  a  tremendous  step  towards 
Socialism." 

The  question  of  jfinding  money  for  this  pro- 
gramme is  a  difficulty  which,  as  Mr.  Snowden 
says,  is  "felt  only  by  those  persons  who  give 
Socialists  credit  for  sufficient  honesty  as  to  be- 
lieve that  compensation  will  be  paid."     And  he 


RISKS   OF   STATE   SOCIALISM     167 

points  out  that  these  difficulties  vanish  when  it 
is  remembered  that  the  railways  have  been 
nationalized  in  many  other  countries  without 
confiscation,  and  that  "  in  this  country  we  have 
transferred  from  private  to  public  ownership 
such  great  concerns  as  the  telephone  system, 
the  London  Docks,  the  Metropolitan  Water 
Companies  and  tens  of  millions  of  property  in 
tramways  and  gas  and  electricity  works." 

It  is  quite  true  that  the  transfer  of  property 
from  private  to  public  hands  can  be  carried 
through  quite  equitably  without  raising  any 
money  for  the  actual  process  of  transfer.  The 
State  takes  over  the  capital  and  debts  of  the 
enterprise,  and  creates  national  securities  with 
which  to  buy  out  the  holders.  The  State  debt 
is  enormously  increased,  but  it  is  only  increased 
by  the  cancellation  of  the  capital  and  debts  of 
the  enterprise  acquired.  The  charge  upon  the 
country's  wealth  and  productive  power  is  not 
necessarily  increased  at  all,  and  is  only  increased 
if  the  State  or  municipality  pays  extravagant 
prices.  But  there  is  a  danger  which  past  experi- 
ence shows  to  be  a  very  real  one,  that  State 
administration,  being  at  present  inefficient  and 
extravagant,  will  not  provide  a  better  service 
to  the  community,  will  not  be  able  to  treat  its 


i68     THE    CASE    FOR   CAPITALISM 

workers  any  better,  or  to  get  a  more  willing 
and  loyal  service  from  them  ;  and,  owing  to  its 
inefficiency  and  extravagance,  will  not  be  able 
to  earn  a  sufficient  sum  to  meet  the  interest 
and  redemption  of  the  debt  created  in  order  to 
buy  out  the  private  owners.  In  that  case, 
every  enterprise  which  the  State  takes  over 
would  increase  its  charges  and  diminish  the 
income  out  of  which  it  has  to  meet  these 
charges.  If  these  things  are  so,  any  attempt 
to  introduce  Socialism  prematurely  before 
collective  authorities  had  learnt  to  conduct 
enterprise  on  business  lines,  might,  instead  of 
opening  the  way  to  the  Promised  Land,  only 
lead  to  economic  disaster.  Is  it  worth  while  to 
gamble  on  such  a  risk  ? 


CHAPTER  VIII 

A    PICTURE    OF    STATE    SOCIALISM 

Any  one  who  wants  a  detailed  picture  of 
the  manner  in  which  the  State  might  obtain 
control  of  the  means  of  production  and 
organize  industry  to  the  exclusion  of  the 
private  capitalist,  can  find  it  in  a  book 
called  The  Ragged- Trousered  Philanthropist, 
by  Robert  Tressall,  published  in  April  19 14 
by  Grant  Richards.  It  is  a  tragic  and  very 
interesting  book,  and  is  said  to  have  been 
written  by  a  Socialistic  house-painter,  who  died 
soon  after  writing  it.  It  describes  the  experi- 
ences of  an  educated  working  man,  with  high 
ideals  of  work  and  life,  employed  by  a  very  third- 
rate  firm  of  builders  and  decorators  among  a 
crowd  of  jeering  and  illiterate  companions, 
whom  h*^  tried  to  stimulate  to  accept  his  own 
views  on  Socialism,  as  being  the  only  remedy 
for  the  evils  under  which  he  and  they  suffered. 
In  the  last  chapter  this  idealist,  finding  himself 
threatened  with  deadly  disease,  decides  that  the 

169 


I70    THE    CASE    FOR   CAPITALISM 

kindest  thing  to  do  for  his  wife  and  son  is  to 
take  them  with  him  out  of  a  world  which  seem 
to  him  hopeless.  It  is  a  terrible  book,  and  zs 
a  picture  of  the  black  side  of  the  present 
economic  arrangements  of  society,  is  well  worth 
study. 

The  most  interesting  pages  in  it — apart  from 
the  roughly  humorous  descriptions  of  the  gaiety 
with  which  these  unfortunate,  underpaid,  and 
overdriven  workers  face  the  misery  of  their  lot 
— are  those  in  which  the  idealist  worker,  Frank 
Owen,  describes  to  his  companions,  in  answer 
to  their  jeering  questions,  the  means  by  which 
their  lot  could  be  bettered.  In  the  course  of 
one  of  these  orations  he  gives  a  detailed  and 
ingenious  description  of  the  birth  of  the 
Socialistic  State  (page  334).  He  begins  by  deal- 
ing with  the  land,  saying  that  a  large  part  of 
it  may  be  got  back  "  in  the  same  way  as  it  was 
taken  from  us.  The  ancestors  of  the  present 
holders  obtained  possession  of  it  by  simply 
passing  Acts  of  Enclosure ;  the  nation  should 
regain  possession  of  those  lands  by  passing 
Acts  of  Resumption."  As  to  the  rest  of  the 
land,  he  suggested  that  the  present  holders 
should  be  allowed  to  keep  it  during  their  lives 
and  that  it  should  then  revert  to  the  State  "  to 
be  used  for  the  benefit  of  all."     The  railways, 


PICTURE  OF  STATE  SOCIALISM    171 

of  course,  would  be  nationalized  at  once.  All 
railway  servants,  managers  and  officials  would 
continue  their  work,  being  henceforward  in  the 
employ  of  the  State.  The  State  would  pay  to 
shareholders  the  average  dividends  they  had 
received  during  the  previous  three  years,  these 
payments  being  continued  to  the  present  share- 
holders for  life,  or  for  a  staled  number  of  years, 
and  the  shares  would  be  made  non-transferable. 
As  for  the  factories,  shops,  and  other  means 
of  production  and  distribution,  the  State  would 
"  adopt  the  same  method  of  doing  business 
as  the  present  owners."  The  speaker  argues 
that  even  as  the  big  Trusts  and  Companies  are 
crushing  by  competition  the  individual  workers 
and  small  traders,  so  the  State  should  crush  the 
Trusts  by  competition.  "  It  is  surely  justifiable 
for  the  State  to  do  for  the  benefit  of  the  whole 
people  that  which  the  capitalists  are  already 
doing  for  the  profit  of  a  few  shareholders." 
The  first  step  would  be  the  establishment  of 
retail  stores  for  the  purpose  of  supplying  all 
national  and  municipal  employees  with  the 
necessaries  of  life  at  the  lowest  possible  prices. 
The  Government  would  buy  these  goods  from 
private  manufacturers  in  such  large  quantities 
that  it  would  be  able  to  get  them  at  the  very 
cheapest  rate,  and  as  there  would  be  no  high 


172     THE    CASE    FOR   CAPITALISM 

rents  to  pay  for  showy  shops,  and  no  advertising 
expenses,  and  as  the  Government  would  not 
be  aiming  at  profit,  it  would  be  able  to  sell 
much  cheaper  than  the  profit-making  private 
stores.  These  National  Service  Retail  Stores 
would  only  serve  those  in  the  public  service  ; 
and  coined  money  would  not  be  taken  by 
them  in  payment  for  the  things  sold.  At  first 
all  public  servants  would  continue  to  be  paid 
in  metal  money, ^  but  those  who  wished  it 
would  be  paid  all  or  part  of  their  wages  in 
paper  money,  which  would  be  taken  in  payment 
for  their  purchases  at  the  National  Stores, 
National  Hotels,  National  Restaurants,  and 
other  places  which  would  be  established  for 
the  convenience  of  those  in  the  State  service. 
Owing  to  the  cheapness  of  the  articles  that 
it  would  command,  the  paper  money  would 
win  increasing  favour,  and  all  public  servants 
would  soon  prefer  to  have  all  their  wages  paid 
in  it.  The  Government,  however,  would  still 
need  metal  money  to  pay  the  manufacturers 
who  supplied  the  goods  sold  in  the  National 
Stores.  But  to  avoid  buying  all  these  things 
from  them  the  State  would  then  begin  to 
produce  for  itself. 

^  At  the  time  when  Mr.  Tressall's  book  was  written,  we 
had  a  gold  currency  in  England. 


PICTURE  OF  STATE  SOCIALISM    173 

Public  lands  would  be  cultivated,  and  public 
factories  would  be  started  to  produce  food, 
boots,  clothing,  furniture  and  all  other  neces- 
saries and  comforts  of  life.  All  who  were  out 
of  employment  and  willing  to  work  would  be 
given  work  on  these  farms  and  in  these 
factories,  which  would  be  "  equipped  with  the 
most  up-to-date  and  efficient  labour-saving 
machinery."  How  the  State  is  going  to  get 
the  machinery  is  not  made  clear.  Perhaps  it 
could  provide  the  necessary  money  by  taxation, 
if  by  that  time  there  were  any  one  left  to  tax, 
or  perhaps  it  would  just  take  it.  From  its 
farms  and  factories  so  equipped  It  would  pour 
out  a  great  flood  of  cheap  goods,  and  all  public 
servants  would  revel  in  "  abundance  of  every- 
thing." When  the  workers  who  were  being 
"exploited  and  sweated"  by  the  private  capita- 
lists saw  what  was  happening,  they  would  come 
and  ask  to  be  allowed  to  work  for  the  State. 
"  That  will  mean  that  the  State  army  of  pro- 
duction workers  will  be  continually  increasing 
in  numbers.  More  State  factories  will  be 
built,  more  land  will  be  put  into  cultivation. 
Men  will  be  given  employment  making  bricks, 
woodwork,  paints,  glass,  wall-papers  and  all 
kinds  of  building  materials  ;  and  others  will 
be  set  to  work  building,  on  State  land,  beautiful 


174    THE   CASE    FOR   CAPITALISM 

houses,  which  will  be  let  to  those  employed  in 
the  service  of  the  State.  The  rent  will  be 
paid  with  paper  money." 

State  fishing-fleets  would  be  the  next  State 
enterprise,  and  in  order  to  deal  with  the  "  great 
and  continuously  increasing  surplus  stock  "  in 
its  hands,  the  Government  would  acquire  or 
build  fleets  of  steam  trading-vessels,  manned 
and  officered  by  State  employees,  to  carry  the 
surplus  stocks  to  foreign  countries,  to  be  sold 
or  exchanged  for  foreign  products,  which  would 
be  brought  to  England  and  sold  at  the  National 
Service  Stores,  at  the  lowest  possible  price,  for 
paper  money,  to  those  in  the  service  of  the 
State.  A  detachment  of  the  Industrial  Army 
would  be  employed  as  actors,  artists  and 
musicians,  singers  and  entertainers.  Everyone 
that  could  be  spared  from  producing  necessaries 
would  be  set  to  work  to  create  pleasure,  culture 
and  education. 

Meanwhile,  private  employers  and  capitalists 
would  find  that  no  one  would  come  and  work 
for  them  "  to  be  driven  and  bullied  and  sweated 
for  a  miserable  trifle  of  metal  money,"  and 
some  might  threaten  to  leave  the  country  and 
take  their  capital  with  them.  "  As  most  of 
these  persons  are  too  lazy  to  work,  and  as  we 
shall  not  need  their  money,  we  shall  be  very 


PICTURE  OF  STATE  SOCIALISM    175 

glad  to  see  them  go."  But  their  real  capital, 
their  factories,  farms,  mines  or  machinery, 
would  be  a  different  matter.  So  a  law  would 
be  passed,  declaring  that  all  land  not  cultivated 
by  the  owner  or  any  factory  shut  down  for 
more  than  a  specified  time,  would  be  taken 
possession  of  by  the  State  and  worked  for  the 
benefit  of  the  community.  Fair  compensation 
would  be  paid  in  paper  money  to  the  former 
owners,  who  would  be  granted  an  income  or 
pension  either  for  life  or  for  a  stated  period. 
Wholesale  and  retail  dealers  would  be  forced 
to  close  down  their  shops  and  warehouses,  first, 
because  they  would  not  be  able  to  replenish 
their  stocks,  and  secondly  because  even  if  they 
were  they  would  not  be  able  to  sell  them. 
This  would  throw  out  of  work  a  great  host  of 
people  "  at  present  engaged  in  useless  occupa- 
tions, such  as  managers  and  assistants  in  shops 
of  which  there  are  now  half  a  dozen  of  the 
same  sort  in  a  single  street,  and  the  thousands 
of  men  and  women  who  are  slaving  away  their 
lives  producing  advertisements.  These  people 
are  in  most  cases  working  for  such  a  miserable 
pittance  of  metal  money  that  they  are  unable 
to  procure  sufficient  of  the  necessaries  of  life 
to  secure  them  from  starvation."'  (Here  the 
writer    surely    overstates   his    case.)     But   all 


176    THE  CASE    FOR   CAPITALISM 

those  who  are  willing  to  work  would  be  at  once 
employed  by  the  State  in  producing  or  distribut- 
ing the  necessaries  and  comforts  of  life.  The 
Government  would  build  houses  for  the  families 
of  all  those  in  its  employment,  and  all  other 
house  property  of  all  kinds  would  rapidly  fall 
in  value.  "  The  slums  and  the  wretched  dwell- 
ings now  occupied  by  the  working-classes,  the 
miserable,  uncomfortable,  jerry-built  *  villas  ' 
occupied  by  the  lower  middle-classes  and  by 
*  business  '  people,  will  be  left  empty  and  value- 
less upon  the  hands  of  their  rack-renting  land- 
lords, who  will  very  soon  voluntarily  offer  to 
hand  them,  and  the  ground  they  stand  upon, 
to  the  State  on  those  terms  accorded  to  the 
other  property  owners,  namely,  in  return  for 
a  pension." 

By  this  time  the  nation  would  be  the  only 
employer,  and  as  no  one  would  be  able  to 
get  the  necessaries  of  life  without  paper  money, 
and  as  the  only  way  to  get  it  would  be  by 
working,  every  mentally  and  physically  capable 
person  in  the  community  would  be  helping  in 
the  great  work  of  production  and  distribution. 
There  would  be  no  unemployed  and  no  over- 
lapping. For  every  one  labour-saving  machine 
in  use  to-day,  the  State  would,  if  necessary, 
employ  a  thousand,  and  there  would  be  produced 


PICTURE  OF  STATE  SOCIALISM   177 

such  a  *'  stupendous,  enormous,  prodigious, 
overwhelming  abundance  of  everything,"  that 
soon  it  would  be  necessary  to  reduce  the  hours 
of  the  workers  to  four  or  five  hours  a  day.  All 
young  people  would  remain  at  the  schools  and 
universities  until  they  were  twenty-one  years 
of  age.  At  forty-five  every  one  would  retire 
on  full  pay.  "Thus,  for  the  first  time  in  the 
history  of  humanity,  the  benefits  and  pleasures 
conferred  upon  mankind  by  science  and  civili- 
zation will  be  enjoyed  equally  by  all,  upon  the 
one  condition,  that  they  shall  do  their  share 
of  the  work  in  order  to  make  all  these  things 
possible.  These  are  the  principles  upon  which 
the  Co-operative  Commonwealth  will  be  organ- 
ized ;  the  State  in  which  no  one  will  be 
distinguished  or  honoured  nbove  his  fellows 
except  for  Virtue  or  Talent ;  where  no  man  will 
find  his  profit  in  another's  loss,  and  we  shall 
no  longer  be  masters  and  servants,  but  brothers, 
free  men,  and  friends  ;  where  there  will  be  no 
weary  broken  men  and  women  passing  their 
joyless  lives  in  toil  and  want,  and  no  little 
children  crying  because  they  are  hungry  or 
cold." 

I  have  given  this  detailed  summary  largely 
in  Mr.  Tressall's  own  words,  because  it  is  the 
only  picture  of  a  Socialistic  State  that  I  know 


178    THE   CASE    FOR   CAPITALISM 

which  works  out  in  detail  how  it  came  into 
being.  William  Morris'  beautiful  dream  in 
News  from  Nowhere  shows  us  life  under 
Socialism  but  does  not  tell  us  how  it  came 
about,  or  even  how  the  material  needs  of  the 
Socialistic  community  were  met.  Mr.  Tressall's 
scheme,  though  it  bristles  with  obvious  diffi- 
culties and  involves  some  injustices,  is  not 
altogether  impracticable  and,  while  the  mere 
suggestion  of  paper  money  in  connection  with 
a  Socialistic  Government  makes  one  shudder  in 
the  light  of  recent  experiences,  there  is  nothing 
necessarily  unsound  in  his  paper  money  as  long 
as  its  authors  did  not  make  too  much  of  it. 

Most  of  us  will  admit  that  the  picture  is  in 
many  ways  highly  attractive,  and  that  if  the 
writer's  ideals  could  be  secured  by  the  methods 
that  he  proposes  it  would  be  worth  while  to 
sacrifice  a  good  deal,  in  order  to  obtain  them. 
But  some  very  large  assumptions  are  involved 
by  his  exposition.  In  the  first  place,  he  gives 
to  the  State  officials  a  power  of  organization 
which  is  at  present  more  notable  as  an  effi^rt 
of  idealist  imagination  than  likely  to  be  realized 
in  the  world  of  fact ;  and  it  also  assumes 
efficiency  and  alacrity  on  the  part  of  those  who 
work  for  the  State  concerning  which  one  can 
only  feel  a  certain  amount  of  scepticism. 


PICTURE  OF  STATE  SOCIALISM    179 

If  it  involves  certain  injustices,  Mr.  Tressall's 
scheme  also  carries  with  it,  if  it  could  be  carried 
out,  very  great  benefits  to  a  very  large  pro- 
portion of  the  population.  But  there  remains 
still  the  question  whether,  if  we  could  swallow 
all  the  injustices  and  all  the  assumptions  in 
return  for  all  the  promised  benefits,  the  result 
achieved  would  be  one  in  which  anything  like 
economic  freedom  would  be  secured,  and  in 
which  the  nation  as  a  whole  would  be  better 
off  in  every  sense  of  the  word. 

On  this  subject,  as  has  already  been  observed, 
the  most  outspoken  critics  of  State  Socialism 
are  the  exponents  of  the  new  variety  of 
Socialism  known  as  Guild  Socialism.  Mr. 
Cole,  who  has  already  been  quoted  in  former 
chapters,  says  on  page  5  of  his  book  on  Self- 
Government  in  Industry  that  "  Before  the  war 
the  problem  of  industrial  control  had  forced 
its  way  to  the  front.  State  Socialism,  in  part 
a  bureaucratic  and  Prussianizing  movement 
and  in  part  a  reaction  against  the  distribution 
of  wealth  in  capitalist  society,  continued  to 
develop,  at  least  in  its  Prussian  aspects.  But, 
from  the  working-class  point  of  view,  State 
Socialism  was  intellectually  bankrupt.  The 
vast  system  of  regimentation  inaugurated  by 
the    Insurance   Act    was   opening   men's   eyes 


i8o     THE    CASE    FOR   CAPITALISM 

to  the  dangers  of  State  control,  and,  in  those 
services,  such  as  the  post  office,  which  were 
ah'eady  publicly  administered,  discontent  was 
growing  because  the  State  and  municipal  em- 
ployees found  that  they  were  no  less  wage 
slaves  than  the  employees  of  private  profiteers." 
And  on  page  114:  "The  crying  need  of  our 
days  is  the  need  for  freedom.  Machinery  and 
Capitalism  between  them  have  made  the  worker 
a  mere  serf,  with  no  interest  in  the  product 
of  his  own  labour  beyond  the  inadequate  wage 
which  he  secures  by  it.  The  Collectivist  State 
would  only  make  his  position  better  by  securing 
him  a  better  wagfe,  even  if  we  assume  that 
Collectivism  can  ever  acquire  the  driving-power 
to  put  its  ideas  into  practice  :  in  other  respects 
it  would  leave  the  weaker — [presumably  a 
misprint  for  "  worker "]  essentially  as  he  is 
now — a  wage  slave,  subject  to  the  will  of  a 
master  imposed  on  him  from  without.  How- 
ever democratically-minded  Parliament  might 
be,  it  would  none  the  less  remain,  for  the 
worker  in  any  industry,  a  purely  external 
force,  imposing  its  commands  from  outside 
and  from  above.  The  postal  workers  are  no 
more  free  while  the  post  office  is  managed 
by  a  State  department  than  Trade  Unionists 
would   be   free   if  their   Executive  Committees 


PICTURE  OF  STATE  SOCIALISM    i8i 

were  appointed  by  His  Majesty's  Minister  of 
Labour." 

Equally  emphatic  is  a  book  called  National 
Guilds :  an  Enquiry  into  the  Wage  System  and 
the  Way  Out,  which  is  described  on  its  cover 
as  by  A.  R.  Orage,  and  on  its  title-page  as 
by  S.  G.  Hobson,  edited  by  A.  R.  Orage. 
On  page  21,  the  Hobson-Orage  partnership 
observes  that  "  there  is  this  in  common  between 
Municipal  and  State  Socialism  :  both  are  equally 
committed  to  the  exploitation  of  labour  by 
means  of  the  wage  system,  to  the  aggrandise- 
ment of  the  municipal  investor.  State  Social- 
ism is  State  capitalism,  with  the  private 
capitalist  better  protected  than  when  he  was 
dependent  upon  voluntary  effort." 

Later  on,  on  page  153,  they  say  that  they 
"have  shown  that  the  continuance  of  the 
wage  system  is  inevitable  if  the  State  Socialist 
prevails,  since  he  can  only  acquire  productive 
and  distributive  undertakings  by  payment  of  a 
compensation  that  would  bear  as  heavily  upon 
labour  as  the  present  burden  of  rent,  interest, 
and  profits."  And  the  champion  of  Guild 
Socialism  who  has  published  the  latest  book  on 
the  subject,  Mr.  G.  R.  Stirling  Taylor,  deals 
roughly  with  the  question  of  bureaucratic 
efficiency. 


i82     THE   CASE    FOR   CAPITALISM 

"Bureaucracy,"  he  says,^  "as  a  matter  of 
fact,  does  not  choose  expert  workers  ;  it  chooses 
first-class  bureaucrats.  It  would  be  inhuman 
if  it  did  not  look  upon  the  world  with  the  rather 
timid  eyes  of  the  sedentary  clerk.  It  probably 
thinks  that  the  world  can  be  saved  if  a  suffi- 
cient number  of  letters  and  reports  are  written 
about  it.  There  are  hundreds  and  thousands 
of  clever,  self-sacrificing  officials  in  Government 
offices,  who  pass  their  lives  in  helpful  work. 
But  the  most  helpful  work  they  can  do  is  to 
stand  on  one  side,  and  not  act  as  a  buffer 
between  the  men  who  are  themselves  pro- 
ducing and  the  community  which  is  receiving. 
It  is  not  that  all  Government  officials  are 
dishonest  or  foolish  ;  most  of  them  are  the 
reverse.  The  bad  thing  about  them  all  is  that 
they  are  clerks,  and  wealth  is  not  made  by 
clerks." 

Thus  all  the  attractions,  such  as  they  are, 
of  State  Socialism  for  those  who  see  how  black 
are  the  effects  of  the  present  system,  are 
dismissed  as  a  fraudulent  and  futile  chimera 
by  the  advocates  of  the  latest  form  of  Socialistic 
zeal,  namely  the  National  Guilds.  In*  the 
meantime  the  Capitalist  may  chuckle  as  he 
sees  the  Socialism  that  was  the  bogey  of  his 
*  TfK  Guild  State,  page  59. 


PICTURE  OF  STATE  SOCIALISM   183 

childhood  derided  by  Socialists  of  the  latest 
brand,  and  wonder  when  a  new  vintage,  equally 
contemptuous  of  the  Guildsmen,  will  come 
into  fashion. 

The  schemes  which'these  ingenious  gentlemen 
put  forward  for  the  bettering  of  our  lot  will 
be  examined  in  later  chapters.  In  the  mean- 
time their  criticisms  of  State  Socialism  are  by 
no  means  necessarily  decisive.  Labour  leaders 
seem  to  be  in  favour  of  nationalizing  every- 
thing, though  it  is  by  no  means  clear  that 
thereby  they  voice  the  real  opinions  of  those 
whom  they  are  alleged  to  represent.  They 
seem  to  think  that  somehow  nationalization  can 
be  adopted  without  involving  the  bureaucratic 
control  which  they  emphatically  flout.  Mr. 
Brace  in  the  House  of  Commons,  Nov.  28,  1919, 
said,  "The  mining  people  are  driven  to  despair 
at  this  blunder  in  connection  with  the  Coal 
Controller's  department.  .  .  .  This  is  not 
how  nationalization  would  work.  If  it  were 
I  would  oppose  it.  This  is  bureaucratic  con- 
trol pure  and  simple,  and  it  is  the  worst  of 
all  systems.  Better  far  go  back  to  private 
ownership  and  private  control."  But  he  did 
not  explain  how  nationalization  could  be 
accomplished  and  bureaucratic  control  avoided. 
Whatever  attempts  are  made  to  dodge  it  by 


i84     THE  CASE    FOR   CAPITALISM 

means  of  committees  and  district  councils, 
nationalization  must  surely  mean  that  the  nation 
puts  money  into  an  industry,  and  so  Treasury 
control  becomes  inevitable,  with  all  its  con- 
sequences. 

A  state  of  society  in  which  everybody  worked 
and  nobody  was  overpaid  and  nobody  was 
underpaid,  and  everybody  enjoyed  a  fair  share 
of  an  overwhelming  abundance  of  the  good 
things  of  life  has  certainly  enormous  advantages 
to  recommend  it,  if  it  can  be  attained,  as 
compared  with  our  present  system.  Neverthe- 
less, even  this  is  only  to  be  secured,  according 
to  its  advocates,  by  the  introduction  of  a  system 
which  might  carry  with  it  very  deadening 
drawbacks.  Mr.  Cole  deals  a  deadly  blow  at 
State  Socialism  when  he  speaks  of  the  "  regi- 
mentation "  involved  by  it,  and  describes  it  as 
a  Prussianizing  movement.  In  order  to  obtain 
the  very  great  economy  in  production,  which 
is  certainly  possible  if  a  really  efficient  State 
administration  took  the  business  in  hand, 
decided  what  was  good  for  the  community 
to  consume,  and  then  set  the  whole  energies 
of  the  nation  on  to  producing  those  particular 
articles,  it  would  be  necessary  to  lose  the 
freedom  of  choice  in  production  and  consumption 
which  our  present  system  gives  us,  involving 


PICTURE  OF  STATE  SOCIALISM   185 

some  waste,  but  at  the  same  time  conferring 
certain  benefits  which  are  rightly  very  dear 
to  the  great  majority  of  mankind,  and  will 
continue  to  be  so. 

To  most  of  us,  to  find  ourselves  members 
of  a  monstrous  organization  which  regulated 
our  lives  from  our  birth  to  our  death,  telling 
us  what  work  we  are  to  do,  what  necessaries 
of  life  we  are  to  consume,  and  what  pleasures 
we  are  to  enjoy,  would  seem  to  be  a  fate 
under  which,  though  we  might  get  a  much 
larger  supply  of  some  of  the  good  things 
of  life  than  we  now  enjoy,  we  should  only  do 
so  through  the  sacrifice  of  all  the  freedom  and 
fumbling  and  failure  which  make  life  worth 
living  because  they  are  our  own  fault  and 
make  men  and  women  of  us  by  testing  us  and 
battering  us  with  our  own  blunders  and  teaching 
us  to  take  risks.  It  might  be  cheaper  to  have 
national  retail  stores  at  which  we  all  had  to 
shop,  instead  of  half  a  dozen  shops  in  the 
same  street  competing  for  our  custom,  but 
should  we  be  so  well  served,  and  should  we 
have  the  same  variety  of  choice,  and  should  we 
not  suffer  very  considerable  inconvenience  by 
having  our  wants  supplied  by  people  who  had 
no  incentive  of  private  gain  to  spur  them  to 
do  the  best  that  they  can  for  their  customers  ? 


i86     THE    CASE    FOR   CAPITALISM 

As  human  nature  is  at  present,  it  seems  most 
probable  that  our  dealings  with  the  great 
Government  stores  might  often  be  very  un- 
comfortable, disagreeable  and  unsatisfying.  It 
has  long  been  a  commonplace  that  the  difference 
of  spirit  in  which  one  is  served  at  a  post  office 
and  at  a  private  shop  which  depends  on  its 
customers'  goodwill  for  its  profits  is  markedly 
in  favour  of  the  latter.  And  a  very  inter- 
esting confirmation  of  the  incentive  of  profit 
in  rendering  services  to  the  consumer  has 
been  provided  during  the  late  war,  when,  owing 
to  restrictions  on  the  supply  of  goods  and 
the  absence  of  competition,  shopkeepers  no 
longer  had  the  same  need  to  observe 
ordinary  courtesy  towards  their  customers.  It 
is  often  assumed  by  Socialistic  enthusiasts  that 
when  once  profit-making  and  competition  are 
eliminated  every  one  will  be  sunny  and  kindly 
and  helpful.  How  far  this  theory  is  from 
fact  was  made  clear  to  any  one  who  during 
the  war  wanted  to  buy  a  pound  of  sugar 
or  a  box  of  matches  or  anything  in  which 
profit  was  automatic  and  competition  was 
.suspended. 

But  even  if  this  were  not  so,  if  we  not  only 
had  abundance,  which  is  doubtful,  but  also 
pleasant  and  kindly  relations  between  producer 


PICTURE  OF  STATE  SOCIALISM    187 

and  consumer,  which  is  problematical,  would 
it  make  up  for  the  loss  of  the  old  freedom  to 
make  mistakes  in  our  own  way  and  so  attain 
to  that  development  which  is  only  possible  to 
those  who  have  a  chance  of  doing  and  being 
wrong?  To  quote  Mr.  Stirling  Taylor  again: 
"  Doing  the  wrong  thing  ourselves  is  often 
more  stimulating  than  doing  the  right  thing 
because  somebody  else  orders  it."  To  have 
all  the  pitfalls  of  life  filled  in  and  fenced  off 
by  bureaucratic  efficiency  would  make  it  a 
very  comfortable  proceeding  perhaps,  but  as 
exhilarating  and  stimulating  as  a  journey  through 
a  tunnel  in  a  Pullman  car.  If  it  were  the  only 
possible  cure  for  destitution,  then  perhaps 
nine-tenths  of  us  might  submit  to  it,  with 
resignation,  in  the  interests  of  the  now  unfortu- 
nate tenth.  But  is  there  no  other  way  of 
solving  this  terrible  problem  but  by  living  in  a 
society  which  at  best  would  be  a  glorified  and 
well-appointed  workhouse?  If  there  is  any 
other  way,  surely  those  who  believe  that  a 
sound  and  good  people  can  only  be  made  out 
of  sound  and  good  individuals,  and  that  no 
individuals  can  learn  to  be  sound  and  good 
except  by  facing  life's  problems  for  them- 
selves, are  entitled,  and  bound,  to  resist 
the     regimentation      and      tyranny     involved 


i88     THE    CASE    FOR   CAPITALISM 

by  State  Socialism.  Under  it  the  individual 
would  have  as  much  chance  of  development 
and  progress  as  a  fowl  in  an  intensive  poultry 
farm,  and  would  probably  be  not  nearly  as  well 
fed  as  they  are. 


CHAPTER    IX 

GUILD    SOCIALISM 

Every  one  who  has  recognized  the  evils  of 
the  Capitalist  system,  and  been  forced  to  the 
conclusion  that  State  Socialism,  though  it 
might  cure  some  of  these  evils,  could  do  so 
only  at  the  risk  of  a  great  loss  in  productive 
output  and  by  the  establishment  of  bureaucratic 
control  that  might  have  deadening  effects  on 
moral  and  intellectual  growth,  must  have  been 
thrilled,  as  with  the  hope  of  spring,  when  he  or 
she  heard  that  a  new  school  of  Socialism  was 
setting  out  to  make  things  better  by  means  of 
National  Guilds.  The  word  guild  is  hardly 
associated  with  freedom,  having,  as  hitherto 
used,  generally  implied  a  more  or  less  close 
corporation,  very  jealous  of  its  privileges. 
Nevertheless,  it  had  a  pleasant  mediaeval 
smack  on  the  mental  palate,  and  everybody  but 
the  most  uncompromising  economic  Tories 
turned  to  the  study  of  the  literature  of  the  new 
faith  with  a  hopeful  mind,  most  ready  to  find 
salvation,  if  it  was  really  to  be  had. 

189 


I90     THE    CASE    FOR   CAPITALISM 

Before  we  entered  on  this  study  we  had 
probably  heard  from  conversation  with  its 
disciples  a  rough  outline  of  its  doctrines — 
economic  freedom  to  be  secured  by  the  abolition 
of  the  wage  system,  every  industry  to  be  organ- 
ized into  a  great  watertight  blackleg-proof 
union  including  all  the  workers  by  hand  or 
brain,  the  capitalist  to  be  got  rid  of,  the  great 
new  unions  to  be  the  new  Guilds,  which  were 
to  give  the  worker  freedom,  and  a  new  com- 
munity to  be  founded  on  the  basis  of  "  organi- 
zation by  function." 

From  this  sketch,  which  proved  on  ex- 
amination to  be  very  near  the  mark,  it  appeared 
that  there  was  much  in  common  between  Guild 
Socialism  and  Syndicalism,  which  has  hitherto 
had  little  support  in  this  country.  Concerning 
it  Mr.  Snowden  tells  us,  in  his  book  on  Social- 
ism and  Syndicalism,  page  205,  that  '*  there 
is  no  authoritative  and  definite  statement  of  its 
philosophy  or  its  policy  or  its  aims  by  those  who 
profess  to  accept  it.  Syndicalism  is  one  thing 
according  to  one  of  its  exponents,  and  some- 
thing very  different  according  to  another." 
This  of  course  is  inevitable  in  the  case  of  a  new 
doctrine  that  is  developing  itself,  and  Mr- 
Snowden  was  nevertheless  able  to  tell  us  that 
Syndicalism    "  proposes    that    the   control    of 


GUILD   SOCIALISM  191 

production  shall  be  exercised  by  the  workers  in 
the  various  industries — that  is,  that  the  railways 
shall  be  managed  by  the  railway  workers,  the 
mines  by  the  miners,  the  post  office  by  the 
postal  servants,  and  so  with  regard  to  other 
industries  and  services.  Syndicalists  have  now 
repudiated  the  claim  that  these  industries  shall 
be  owned  by  the  workers  in  the  separate 
industries.  .  .  .  The  Syndicalist,  like  the 
Anarchist,  repudiates  the  State,  and  would 
make  the  social  organization  of  the  future  purely 
an  industrial  one."  As  we  shall  see,  it  is  chiefly 
in  the  matter  of  their  attitude  to  the  State  that 
Syndicalism  and  Guild  Socialism  differ,  since 
the  latter  has,  apparently,  to  leave  a  good  deal 
to  the  State. 

Certain  obvious  difficulties  naturally  came 
into  the  mind  of  any  one  who  took  a  first 
draught  from  the  Guild  Socialist  fountain  as 
above  described.  How,  one  wondered,  could 
economic  freedom  be  secured  for  the  producer 
except  at  the  expense  of  himself  as  a  consumer  ? 
And  as  every  one,  as  a  rule,  produces  one,  or  a 
fraction  of  one,  article  or  service  and  consumes 
thousands  of  them,  is  the  sum  total  of  the 
freedom  of  each  likely  to  be  furthered  by  this 
process  ?  How  are  the  Guilds  to  solve  the 
question  of  value — that  is,  on  what  basis  are  they 


192     THE    CASE    FOR   CAPITALISM 

to  exchange  their  products  ?  State  Socialism 
could  solve  this  problem  by  the  Prussian  process 
of  rationing,  leaving  no  freedom  of  choice  to 
anybody,  either  in  what  they  make  or  what  they 
consume.  But  how  are  the  Guilds  to  solve  the 
question  ?  Would  not  enterprise  and  initiative 
be  checked  under  Guild  monopoly  almost  as 
seriously  as  under  State  control  ?  Who  is 
to  decide  as  to  right  of  entry  to  a  Guild  ? 
Would  the  guildsmen  really  work  better  for  a 
Guild  than  for  an  ordinary  employer  ?  What 
would  happen  if  any  of  the  Guilds,  exercising, 
as  they  would,  a  watertight  monopoly,  started 
the  game — at  which  all  could  play  with  differing 
degrees  of  success — of  mutual  exploitation  ? 

And  this  strange  new  formula  about  "organi- 
zation by  function" — what  did  it  mean?  If 
a  man  is  to  be  a  butcher,  baker,  or  candlestick- 
maker  first,  and  a  citizen  of  his  country,  or  a 
member  of  the  human  brotherhood,  second, 
it  seems  to  be  a  rather  material  standpoint.  It 
would  surely  tend  to  produce  a  selfish  and 
sectional  outlook,  very  different  from  the  con- 
ception of  each  as  a  member  of  a  great  com- 
munity, in  which  divergent  interests  are,  or 
might  be,  attuned  by  co-operation  and  com- 
petition into  a  cheerful  and  inspiring  harmony. 
A  study  of  Guild  Socialist  literature,  in  spite  of 


GUILD    SOCIALISM  193 

the  evident  earnestness  and  sincerity  of  its 
writers,  does  not  remove  these  difficulties. 
State  Socialism  we  found  to  be  theoretically 
possible.  With  an  efficient  bureaucracy,  and  a 
docile  people  ready  to  work  hard  and  to  be  tuld 
what  to  produce  or  consume,  the  system  might 
work  well,  though  only  by  eliminating  the 
surprises  and  failures  that  give  life  much  of 
its  zest  and  most  of  its  discipline.  But  it  is 
difficult  to  see  how  the  schemes  of  the  Guild 
Socialists  could  be  fitted  into  a  system  that 
could  work,  without  the  sacrifice  of  most  of  the 
objects  that  they  hope  to  secure. 

A  book  on  the  subject  of  National  Guilds 
from  which  I  have  already  quoted  freely,  is 
Self-Goverm)ient  in  Industry,  by  G.  D.  H. 
Cole.  On  page  4  he  tells  us  :  "  I  am  putting 
forward  in  this  book  some  general  suggestions 
for  industrial  reconstruction.  These  suggestions 
are  based  upon  the  idea  that  the  control  of 
industry  should  be  democratized  ;  that  the 
worker.s  themselves  should  have  an  ever- 
increasing  measure  of  power  and  responsibility 
in  control,  and  that  capitalist  supremacy  can  be 
overthrown  only  by  a  system  of  industrial 
democracy  in  which  the  workers  will  control 
industry  in  conjunction  with  a  democratized 
State.     This  is  the  system  of  National  Guilds, 

N 


194     THE   CASE    FOR   CAPITALISM 

and  its  dominant  idea  is  that  tlie  individual 
worker  must  be  regarded  not  simply  as  a 
*'  hand,"  a  decreasingly  important  adjunct  to 
the  industrial  machine,  but  as  a  man  among 
men,  with  rights  and  responsibilities,  with  a 
human  soul  and  a  desire  for  self-expression, 
self-government  and  personal  freedom." 

This  dominating  idea  is  cherished  by  most  of 
us  in  these  days.     But  is  it  likely  to  be  achieved 
by   the   establishment    of    a    group    of    great 
monopolies  ?     It  is  rather  disappointing — after 
the  bitter  criticisms  of  State  control  and  bureau- 
cratic tyranny   expressed  by  Guild  Socialists, 
especially  by  Mr.  Cole — to  find  that  the  control 
of  industry  by  the  workers  is  to  be  exercised 
"  in   conjunction   with   a   democratized   State." 
Perhaps,  however,  the  word  "  democratized  "  is 
expected  to  cover  a  multitude  of  blessings,  and 
perhaps   it   might   actually   do   so.     Mr.    Cole 
continues  a  litde  later  (page  6) :  "  Recognizing 
the  paramount  need  for  destroying   the  wage 
system    and   giving  the    producers    the   fullest 
possible  share  in  the  control  of  their  life  and 
work,    National   Guildsmen  saw   also  the  true 
function  of  the  State  and  the  municipality  as 
the    representatives    of  the   consumers,    of  all 
those    who   had   a   common    interest    born   of 
neighbourhood  and  common  use  of  the  means  of 


GUILD   SOCIALISM  195 

life.  They  set  out  therefore  to  devise  a  system 
by  which  the  control  of  industry  might  be 
shared  between  the  organizations  of  producers 
and  consumers,  so  as  to  safeguard  the  interests 
of  the  community  of  consumers  and  at  the  same 
time  to  give  the  workers  freedom  to  organize 
production  for  themselves."  And  on  page  6^ 
he  tells  us  again :  "In  the  first  place  National 
Guildsmen  clearly  know  what  they  want. 
Their  aim  is  a  partnership  between  State  and 
Labour,  accompanied  by  the  abolition  of  the 
system  of  capitalist  production." 

It  thus  appears  that,  under  the  National 
Guild  system,  the  much-abused  State  is  to 
exercise  extremely  important  functions.  It  is 
to  represent  the  consumers  and  safeguard  their 
interests,  but  at  the  same  time  the  workers  are 
to  have  freedom  to  organize  production  for 
themselves.  How  far  is  this  freedom  possible.'* 
And  what  does  it  mean  ?  Does  it  mean  that 
the  workers  are  to  be  free  to  turn  out  whatever 
article  they  like,  irrespective  of  the  wishes  of 
consumers  with  regard  to  the  kind  of  things 
they  would  like  to  have  and  enjoy  ?  And  if  so, 
if  the  workers  happen  to  produce  an  article 
which  nobody  wants,  how  are  they  to  be  paid 
for  their  work?  In  other  words,  what  right 
will   they   have   to   any   of  the   goods   which 


196     THE    CASE    FOR   CAPITALISM 

other  people  are  producing?  In  another  part 
of  his  book,  as  we  shall  see  later,  Mr.  Cole 
says  that  the  workers  must  be  freed  "to  choose 
whether  they  will  make  well  or  ill,"  the  con- 
sumer being  apparently  invited  to  take  the 
article  made  or  leave  it.  But  production  will 
have  to  be  dominated,  under  a  system  of 
National  Guilds  as  under  every  other,  by  the 
needs  of  the  consumer — either  expressed  by 
himself  by  his  purchases  in  the  market,  as 
under  the  present  system,  or  as  expressed,  as 
is  conceivable  under  State  Socialism,  by  the 
decision  of  a  bureaucracy  as  to  what  sort  of 
articles  it  is  good  for  the  community  to  enjoy. 
In  whatever  way  the  decision  is  arrived  at,  the 
producer,  if  he  is  to  justify  himself  economi- 
cally, has  to  produce  what  is  wanted.  If  he 
does  not  produce  what  is  wanted,  his  product 
has  no  economic  value,  and  his  freedom  in  pro- 
duction simply  reduces  him  to  a  useless  parasite 
working  for  his  own  enjoyment,  instead  of  for 
the  satisfaction  of  the  needs  of  the  community. 
Until  we  go  back  to  the  state  of  the  primi- 
tive savage  supplying  all  his  own  wants,  it  is 
the  inevitable  lot  of  all  workers  to  meet  the 
wants  of  somebody  else.  We  thus  see  at  the 
outset  that  in  this  proposed  partnership  between 
the    State  and   Labour  there  are    seeds  of  a 


GUILD    SOCIALISM  197 

good  deal  of  discord  and  friction  which  might 
lead  to  serious  economic  inefficiency.  That  is 
to  say,  unless  the  National  Guilds  representing 
the  producers,  and  the  State  representing  the 
consumers,  work  in  complete  harmony,  the 
strikes  and  friction  which  are  so  serious  a  clog 
on  the  economic  machine  under  our  present 
system,  might  be  replaced  by  even  more  bitter 
contests,  more  bitter  because  they  would  in- 
volve the  whole  society  through  its  political 
machinery. 

On  this  subject  Mr.  Cole  does  not  seem  to 
have  thought  the  matter  out  very  clearly,  and 
here  again  one  must  admit  that  it  is  no  just 
criticism  of  National  Guildsmen  to  tell  them 
that  they  have  not  got  a  cut-and-dried  scheme 
to  cover  every  possibility.  He  tells  us  (page  86) 
"that  the  various  Guilds  will  be  unified  in  a 
central  Guild  Congress,  which  will  be  the 
supreme  industrial  body,  standing  to  the  people 
as  producers  in  the  same  relation  as  Parliament 
will  stand  to  the  people  as  consumers.  .  .  . 
Neither  Parliament  nor  the  Guild  Congress 
can  claim  to  be  ultimately  sovereign  :  the  one 
is  a  supreme  territorial  association,  the  other 
the  supreme  professional  association.  In  the 
one  because  it  is  primarily  concerned  with  con- 
sumption, government  is  in  the  hands  of  the 


198     THE    CASE    FOR   CAPITALISM 

consumers  ;  in  the  other  where  the  main  business 
is  that  of  production,  the  producers  hold  sway." 
Again  he  says  (page  87) :  "Where  a  single 
Guild  has  a  quarrel  with  Parliament,  as  I  con- 
ceive it  may  well  have,  surely  the  final  decision 
of  such  a  quarrel  ought  to  rest  with  a  body 
representative  of  all  the  organized  consumers 
and  all  the  organized  producers.  The  ultimate 
sovereignty  in  matters  industrial  would  seem 
properly  to  belong  to  some  joint  body  repre- 
sentative equally  of  Parliament  and  of  the 
Guild  Congress.  Otherwise,  the  scales  must 
be  weighted  unfairly  in  favour  of  either  con- 
sumers or  producers.  But  if  on  such  questions 
there  is  an  appeal  from  Parliament  and  from 
the  Guild  Congress  to  a  body  more  representa- 
tive than  either  of  them,  the  theories  of  State 
Sovereignty  and  Guild  Congress  Sovereignty 
must  clearly  be  abandoned,  and  we  must  look 
for  our  ultimate  sanction  to  some  body  on 
which  not  merely  all  the  citizens,  but  all  the 
citizens  in  their  various  social  activities,  are 
represented.  Functional  associations  must  be 
recognized  as  necessary  expressions  of  the 
national  life,  and  the  State  must  be  recognized 
as  merely  a  functional  association  —  '  elder 
brother,'  'primus  inter  pares'  The  new  social 
philosophy  which  this  changed  conception   of 


GUILD   SOCIALISM  199 

sovereignty  implies  has  not  yet  been  worked 
out ;  but  if  Guild  Socialists  would  avoid  trip- 
ping continually  over  their  own  and  other 
writers'  terminology,  they  would  do  well  to  lose 
no  time  in  discovering  and  formulating  clearly 
a  theory  consistent  with  the  Guild  idea,  and 
with  the  social  structure  they  set  out  to  create." 
What  all  this  means,  will  perhaps  be  clear  to 
people  of  exceptional  intelligence.  The  ordi- 
nary plain  reader  can  only  see  that  Mr.  Cole 
thinks  it  very  likely  that  a  Guild  may  have  a 
quarrel  with  Parliament — wherein  we  heartily 
agree  with  him.  Further,  that  Mr.  Cole  con- 
cludes that  the  ultimate  sanction  must  be 
provided  by  some  body,  superior  both  to  Par- 
liament and  the  Guild  Congress,  representing 
both  of  them,  and  also  representing  not  merely 
all  the  citizens,  but  all  the  citizens  in  their 
various  social  activities,  and  he  is  left  wondering 
what  that  means.  Also  that  the  State  must  be 
recognized  merely  as  a  functional  association, 
and  he  is  still  more  bewildered,  and  he  will 
finally  agree  very  earnestly  with  Mr.  Cole  that 
the  Guild  Socialists  should  formulate  a  clear 
theory  on  the  subject,  and  tell  us  how  this  queer 
conglomeration  of  ruling  bodies  could  possibly 
work  in  harmony  or  with  anything  like  practical 
efficiency. 


2CX)     THE    CASE    FOR   CAPITALISM 

In  the  meantime  if  the  consumer  is  to  have 
any  voice  in  the  question  of  what  is  to  be  pro- 
duced, and  if,  under  the  system  of  National 
Guilds,  the  State  is  to  represent  the  consumers, 
it  would  seem  that  the  freedom  which  is  pro- 
mised to  the  workers  by  Guild  Socialism,  will 
be  very  seriously  qualified  by  State  control. 
On  a  later  page  (page  io6)  Mr.  Cole  tells  that 
the  State  "  has  no  claim  to  decide  producers' 
questions,  or  to  exercise  direct  control  over 
production  ;  for  its  right  rests  upon  the  fact 
that  it  stands  for  the  consumers,  and  that  the 
consumers  ought  to  control  the  division  of  the 
national  product,  or  the  division  of  income  in 
the  community."  If  the  consumers  are  thus 
to  decide  concerning  the  division  of  the  com- 
munity's income,  it  is  clear  that  the  producing 
Guildsmen  will  have  to  work  according  to  their 
wishes,  and  in  return  for  pay  provided  by  them. 
And  the  freedom  of  the  Guildsman  seems  to 
be  narrowed  down  to  mere  control  of  the 
"conditions  under  which  work  is  carried  on" 
(page  107).  "The  workers,"  says  Mr.  Cole  on 
page  108,  "  ought  to  control  the  normal  conduct 
of  industry  ;  but  they  ought  not  to  regulate 
the  price  of  commodities  at  will,  to  dictate  to 
the  consumer  what  he  shall  consume,  or,  in 
short,   to  exploit  the  community   as   the   indi- 


GUILD   SOCIALISM  201 

vidua]  profiteer  exploits  it  to-day."  Under 
competition  the  "profiteer"  can  only  "exploit 
the  community  "  by  selling  it  something  that 
it  chooses  to  buy.  How  the  consumers  are  to 
express  their  wishes  under  the  Guild  system  is 
not  clear.  Presumably  it  would  be  by  the  votes 
of  the  majority — a  cheerful  prospect  for  those 
who  like  their  clothes  and  boots  comfortable 
rather  than  fashionable,  and  whose  taste  in 
other  things  happens  to  be  eccentric. 

It  is  on  the  subject  of  the  wage  system  that 
Mr,  Cole  is  most  interesting  and  illuminating. 
He  tells  us  (page  154)  that  "the  wage  system  is 
the  root  of  the  whole  tyranny  of  Capitalism ; 
.  .  .  there  are  four  distinguishing  marks  of  the 
wage  system  upon  which  National  Guildsmen 
are  accustomed  to  fix  their  attention.  Let  me 
set  them  out  clearly  in  the  simplest  terms. 

"  I.  The  wage  system  abstracts  '  labour '  from 
the  labourer,  so  that  the  one  can  be  bought  and 
sold  without  the  other. 

"2.  Consequently,  wages  are  paid  to  the  wage- 
worker  only  when  it  is  profitable  to  the  capita- 
list to  employ  his  labour. 

"3.  The  wage-worker,  in  return  for  his  wage, 
surrenders  all  control  over  the  organization  of 
production. 

"4.  The  wage-worker  in  return  for  his  wage 


202     THE    CASE    FOR   CAPITALISM 

surrenders  all  claim  upon  the  product  of  his 
labour, 

"If,"  Mr.  Cole  continues,  "the  wage  system 
is  to  be  abolished,  all  these  four  marks  of 
degraded  status  must  be  removed." 

Let  us  look  at  these  "  four  marks  of  degraded 
status."  The  fact  that  a  man's  labour  can  be 
bought  and  sold  without  the  labourer  is  surely 
some  advance,  as  indeed  is  acknowledged  by 
Guild  Socialists,  on  what  they  call  chattel 
slavery  (as  distinguished  from  wage  slavery), 
under  which  the  worker  and  his  labour  were 
sold  together,  like  so  many  cattle.  The  fact 
that  a  man  sells  his  labour  apart  from  himself, 
if  it  be  a  mark  of  degraded  status,  is  shared  by 
the  labourer  with  all  brain  workers  and  members 
of  professions  who  sell  their  skill  or  their  pro- 
ducts to  consumers.  The  fact  that  when  I 
sell  a  copy  of  this  book  I  do  not  sell  myself  to 
my  readers  at  the  same  time,  seems  to  me  to 
be  rather  an  advantage  than  otherwise,  both 
to  me  and  to  them. 

But  in  a  sense  every  man's  work  is  a  bit  of 
himself,  he  puts  something  of  himself  into  it, 
and  the  economic  arrangement  has  enormous 
advantages  by  which  a  worker  can  sell  bits  of 
himself,  that  is  to  say  bits  of  his  work,  in 
exchange    for   bits   of    other    people,    and   so 


GUILD   SOCIALISM  203 

become,  as  producer  and  consumer,  part  of  a 
great  myriad-handed  economic  body  in  which 
all  co-operate  and  contribute  bits  of  themselves 
to  the  common  good. 

This  system  has  infinite  possibilities  of 
harmonious  development,  but  the  modern 
fashion  in  thought  seems  to  have  decided  that 
there  is  something  radically  wrong  about  it. 
Mr.  Arthur  Henderson,  M.P.,  in  a  speech  at 
an  International  Brotherhood  Congress  at  the 
City  Temple  on  September  16,  1919,  stated 
that  the  workers  wanted  "a  new  method  which 
would  be  based  on  the  recognition  of  funda- 
mental principles  hitherto  disregarded.  Firstly, 
that  human  labour  was  not  a  commodity  or' 
article  of  commerce  to  be  dealt  with  by  the  law 
of  supply  and  demand  as  we  now  dealt  with 
coal,  or  cotton,  or  iron  ore,  but  it  was  that  into 
which  personality  entered  and  through  which 
personality  was  expressed."  Can  one  with  the 
best  will  in  the  world  find  any  real  meaning  in 
this  sounding  phrase  ?  Of  course  we  all  express 
our  personality  in  our  work  just  as  in  anything 
else  that  we  do  ;  but  is  that  any  reason  why  we 
should  not  exchange  it  for  the  work  of  others 
by  selling  it,  and  have  it  valued  according  to 
the  extent  to  which  others  like  it  and  want  it, 
just  as  our  other  actions  get  social  value  from 


204     THE    CASE    FOR   CAPITALISM 

the  approval  or  disapproval  of  those  whom  they 
affect  ?  The  economic  test  of  our  work's  value, 
like  the  social  test  of  our  other  actions,  is 
weakened  by  the  bad  taste  and  judgment  of 
public  opinion  ;  but  can  we  find  a  better,  without 
setting  up  an  economic  and  moral  tyranny, 
which,  incidentally,  is  also  quite  likely  to  make 
bad  mistakes  ? 

The  second  mark  of  degraded  status  is  the 
fact  that  the  wages  are  paid  to  the  wage- worker 
only  when  it  is  profitable  to  the  capitalist  to 
employ  his  labour.  This  degradation  is  also 
shared  by  the  labourer  with  all  other  workers, 
including  even  the  capitalist  who  lends  for 
present  production  the  products  of  work  done 
in  the  past.  The  doctor  and  lawyer  who  work 
directly  for  their  consuming  patients  and  clients, 
can  only  do  so  if  they  can  find  patients  and 
clients  to  employ  them.  The  capitalist  can 
only  get  interest  on  his  money  when  it  is 
invested  in  profitable  enterprises  or  in  the 
obligations  and  loans  of  communities,  Govern- 
ments and  municipalities,  which  are  enabled, 
by  the  production  of  taxpayers  and  ratepayers, 
to  raise  the  money  necessary  to  pay  the 
capitalist  his  wage. 

The  third  mark  of  degraded  status  lies  in  the 
fact  that  the  wage-worker  has  no  control  over 


GUILD   SOCIALISM  205 

the  organization  of  production — in  other  words, 
he  is  freed  from  the  risk  and  responsibiHty  of 
an  extremely  difficult  and  delicate  business  in 
which  mistakes  are  often  made  causing  loss  to 
the  capitalist,  which  the  wage- worker  is  not 
asked  to  share.  And  the  same  thing  applies 
with  even  greater  force  to  the  fourth  mark  of 
degraded  status,  the  fact  that  the  wage-worker 
surrenders  all  claim  upon  the  product  of  his 
labour.  He  produces  something  which  is  only 
economically  justified  if  somebody  else  wants  it 
and  will  pay  for  it  enough  to  cover  the  wages 
of  the  labourer  and  manager,  establishment 
charges,  depreciation  of  plant,  and  interest  on 
capital.  The  business  of  selling  the  product 
is  now  recognized  to  be  one  of  the  most  difficult 
and  costly  items  in  the  business  of  production. 
If,  as  many  besides  the  Guildsmen  hope,  the 
labourer  proposes  to  undertake  this  very  difficult 
job  he  can  do  it  under  the  capitalist  system  and 
has  already  done  it  with  marked  success  through 
his  Co-operative  Societies.  Mr.  Cole  can 
hardly  mean  that  the  labourer,  having  been 
paid  to  make  a  suit  of  clothes,  can  then  expect 
to  keep  it,  but  this  is  what  the  phrase  rather 
seems  to  imply. 

However,   Mr.  Cole  has  decided  that  these 
marks  of  degraded  status  must  be  removed,  and 


2o6     THE    CASE    FOR   CAPITALISM 

that  National   Guilds  must  therefore  assure  to 
the    workers     at   least    the    following    things 

(page  155):— 

"  I.  Recognition  and  payment  as  a  human 
being,  and  not  merely  as  the  mortal  tenement 
of  so  much  labour  power  for  which  an  efficient 
demand  exists. 

"2.  Consequently,  payment  in  employment 
and  in  unemployment,  in  sickness  and  in  health 
alike. 

"  3.  Control  of  the  organization  of  production 
in  co-operation  with  his  fellows. 

"4.  A  claim  upon  the  product  of  his  work, 
also  exercised  in  co-operation  with  his  fellows." 

Very  well  then  :  what  the  National  Guilds 
are  aiming  at  is  that  everybody  is  to  be  paid 
merely  because  they  are  alive,  and  not  because 
they  are  "  mortal  tenements  of  labour  for  which 
an  efficient  demand  exists."  To  those  of  us 
who  suffer  from  the  alluring  but  at  present 
unprofitable  habit  of  slothfulness  this  seems  to 
be  an  extremely  attractive  programme.  The 
right  to  be  kept  alive  has  of  course  been  recog- 
nized grudgingly  by  the  Poor  Law  for  many 
centuries,  but  the  Poor  Law  has  doled  out 
subsistence  under  conditions  which  are  gener- 
ally admitted  to  have  been  inhuman.  Now,  if 
the    National    Guildsmen    reconstruct   society, 


GUILD   SOCIALISM  207 

everybody  who  is  alive  is  to  be  made  really 
comfortable,  whether  he  or  she  works  or  idles ; 
for  presumably  Mr.  Cole  when  he  says  "pay- 
ment" means  the  regular  pay  of  the  Guildsman. 
He  does  not  deal  with  the  delicate  question  as 
to  whether  this  payment  is  to  be  made  to  those 
whose  work  is  wanted,  but  who  do  not  want  to 
work,  and  here  of  course  we  come  up  against 
the  great  problem,  whether  under  such  schemes 
as  these,  anything  like  the  same  efficiency  of 
work  can  be  expected  as  is  produced  now  by 
the  system  of  private  gain. 

At  present  if  a  man  will  not  work  he  has, 
unless  he  owns  private  means,  to  fall  back  upon 
the  degradation  of  the  workhouse,  or  outdoor 
relief,  or  lead  a  life  of  precarious  penury. 
Would  the  ordinary  average  man,  if  the  mere 
fact  that  he  were  alive  gave  him  a  claim  appar- 
ently to  full  payment,  trouble  to  work  much  ? 
A  large  number  of  people  work,  and  work  very 
well,  for  the  mere  pleasure  of  working,  apart 
from  any  question  of  payment.  But  as  human 
nature  is  at  present,  it  is  safe  to  say  that  if  the 
amount  of  work  which  everybody  did  were  left 
to  his  own  choice,  and  if  everybody  whether 
they  worked  or  not,  were  to  receive  full  pay- 
ment out  of  the  common  fund  of  production, 
any  such   fund   would  dwindle  so  rapidly  that 


2o8     THE    CASE    FOR   CAPITALISM 

the  community  would  find  itself  on  short  com- 
mons. In  other  words,  before  the  National 
Guilds  could  be  efficient  as  economic  forces  for 
satisfying  the  wants  of  men,  we  should  have  to 
have  a  new  spirit  and  a  new  heart  at  work 
among  us.  This  Mr.  Cole  himself  acknow- 
ledges, for  he  says  on  page  105  :  *  Nothing  is 
more  certain  than  that  both  State  and  Trade 
Union  if  they  are  to  form  the  foundation  of 
a  worthy  Society,  must  be  radically  altered  and 
penetrated  by  a  new  spirit." 

And  on  page  9  he  observes  that  "in  a 
sense,  the  war  has  led  men  of  all  classes  to 
make  sacrifices  ;  but  emphatically  it  has  not 
led,  among  the  possessing  classes,  to  a  change 
of  heart  which  will  bring  nearer  a  Society  based 
on  human  fellowship." 

So  the  possessing  classes,  in  Mr.  Cole's  view, 
have  still  got  their  old  bad  hearts.  Has  there 
been  that  change  of  heart  necessary  for  bring- 
ing nearer  a  Society  based  on  human  fellowship 
among  the  working  classes  ?  We  seem  to  have 
heard  of  disagreements  between  various  trade 
unions  and  between  the  different  classes  of 
workers.  That  such  things  should  arise  under 
the  strain  of  a  war  was  most  natural  and  inevit- 
able, but  they  certainly  show  that  we  have  a 
long  way  to  travel  before  the  right  of  recogni- 


GUILD    SOCIALISM  209 

tion  and  payment  for  all  as  human  beings,  such 
payment  being  apparently  the  same  for  those 
who  work  and  those  who  do  not,  would  not 
be  a  very  severe  strain  upon  the  economic 
efficiency  of  the  community. 

And  now  let  us  see  how,  according  to  Mr. 
Cole,  this  great  reformation  is  to  be  carried  out. 
He  tells  us  on  page  117  that  "out  of  the 
Trade  Unionism  of  to-day  must  rise  a  Greater 
Unionism,  in  which  craft  shall  be  no  longer 
divided  from  craft,  nor  industry  from  industry. 
Industrial  Unionism  lies  next  on  the  road  to 
freedom,  and  Industrial  Unionism  means  not 
only  'One  Industry,  One  Union,  One  Card,' 
but  the  linking  up  of  all  industries  into  one 
great  army  of  labour.  .  .  .  The  workers  cannot 
be  free  unless  industry  is  managed  and  organized 
by  the  workers  themselves  in  the  interests  of 
the  whole  community." 

"  In  the  interests  of  the  whole  community" 
seems  to  be  slightly  inconsistent  with  the  ideas 
put  forward  in  other  parts  of  Mr.  Cole's  book. 
We  have  seen  from  quotations  given  above 
that  the  workers  are  to  organize  industry,  the 
interests  of  the  community  being  looked  after 
by  the  State,  the  State  being  considered  as 
merely  a  "functional  association,"  whatever  that 
may  mean.     But  now  the  workers  are  suddenly 


2IO    THE   CASE    FOR   CAPITALISM 

told  to  organize  themselves  in  the  interests  of 
the  whole  community,  though  a  few  pages  later 
(page  I2i)  we  find  that  "we  can  only  destroy 
the  tyranny  of  machinery — which  is  not  the 
same  as  destroying  machinery  itself — by  giving 
into  the  hands  of  the  workers  the  control  of 
their  life  and  work,  by  freeing  them  to  choose 
whether  they  will  make  well  or  ill,  whether  they 
will  do  the  work  of  slaves  or  of  free  men." 

The  first  step  is  the  building  up  of  an 
organization  capable  of  assuming  control  (page 
134).  "All  workers  in  or  about  mines  must 
be  in  the  Miners'  Union,  the  whole  personnel 
of  the  cotton  mills  must  be  in  the  Union  of  the 
Cotton  Industry.  A  body  consisting  of  clerks 
or  mechanics  or  labourers  drawn  from  a  number 
of  difterent  industries  can  never  demand  or 
assume  the  conduct  of  industry.  It  can  secure 
recognition,  but  not  control.  A  Postal  Workers' 
Union  or  a  Railway  Union,  on  the  other  hand, 
can  both  demand  and  secure  producers'  control." 
Here  we  have  the  chief  item  on  the  practical 
side  of  this  most  interesting  scheme.  The 
Unions  are  to  include  all  the  workers,  clerks, 
mechanics  and  labourers  connected  with  every 
industry,  and  will  then  take  charge  and  deal 
with  the  capitalist. 

"  The  wage  system  (page  162)  must  end  with 


GUILD   SOCIALISM  211 

a  re-integration,  with  the  placing  in  the  hands 
of  all  of  both  capital  and  labour.  In  order  to 
bring  this  about,  the  wage-earning  class  must 
assume  control  of  capital." 

Does  this  mean  that  the  wage-earning  class 
is  going  to  take  forcible  possession  of  the 
factories  and  plant  which  capital  has  provided  ? 
On  this  point,  Mr.  Cole  does  not  make  himself 
clear.  "This  control,"  he  goes  on,  "under 
National  Guilds,  will  be  exercised  collectively, 
through  the  State,"  but  he  leaves  us  in  the  dark 
as  to  how  the  State  is  going  to  get  control. 

In  another  passage  (page  1 73)  he  says  :  "  We 
in  our  day  and  generation  shall  succeed  in  over- 
throwing industrial  Capitalism  only  if  we  first 
make  it  socially  functionless.  This  means  that, 
before  Capitalism  can  be  overthrown,  there  must 
be  wrested  from  it  both  its  control  of  production 
and  its  control  of  exchange.  This  done,  the 
abolition  of  its  claim  to  rent,  interest  and  profits 
will  follow  as  a  matter  of  course."  Further 
(page  182),  "let  us  suppose  for  a  moment  that 
the  Jeremiahs  are  right  in  denying  the  possi- 
bility of  destroying  the  economic  power  of 
Capitalism  by  any  combination  of  industrial  and 
political  action.  There  remains  the  weapon  of 
catastrophic  action,  envisaged  generally  in  the 
shape  of  the  General  Strike." 


212     THE    CASE    FOR   CAPITALISM 

Later,  on  page  189  :  "  Industrial  action  alone 
cannot  destroy  profits,  or  even  lower  them, 
unless  it  can  overthrow  the  whole  capitalist 
system.  This,  we  have  seen,  cannot  be  done 
purely  by  industrial  power."  The  ordinary 
reader  is  left  wondering  what  all  this  means. 
If  the  workers  can  themselves  supply  the 
managing  ability  that  controls  production  and 
exchange,  they  will  have  made  the  present 
manager  and  organizer  **  socially  functionless." 
But  they  will  only  inflict  the  same  fate  on  the 
capitalist  if  they  either  seize  the  plant  and  tools 
that  he  provides  or  make  their  own  and  be- 
come capitalists  themselves.  The  suggestion 
of  "  catastrophic  action  "  looks  as  if  the  former 
method  were  contemplated,  and  on  this  point 
we  get  rather  more  light  from  other  Guild 
Socialists,  whose  works  will  be  considered  in 
the  next  chapter. 


CHAPTER   X 

THE    GUILD    PROGRAMME 

When  we  turn  to  the  National  Guilds ;  an 
Enq2iiry  into  the  Wage  System,  and  the  Way 
Out,  by  A.  R.  Orage,  or  by  S.  G.  Hobson, 
edited  by  A.  R.  Orage,  we  find  very  much 
the  same  point  of  view  as  Mr.  Cole's»  but  a 
different  method  of  approach.  It  deals  with 
the  problem  of  reforming  our  economic  system 
with  the  jovial  cheerfulness  of  a  Newfoundland 
puppy  worrying  a  door-mat.  It  starts  with  the 
assumption  which  we  have  found  to  be  common 
to  so  many  of  the  people  who  want  to  turn  society 
upside  down,  that  labour  at  present  produces 
everything  that  is  produced  and  is  robbed  of  a 
large  part  of  its  product  by  buccaneers  who 
exploit  it,  and  that  it  is  therefore  labour's  duty 
to  deal  with  the  robbers  as  robbers  should  be 
dealt  with.  Here  is  an  example  both  of  the 
style  of  this  book  and  of  the  methods  which  it 
advocates  (page  5) :  "  Labour  must  realize  that 
its  emancipation  can  only  become  possible 
when  it  has  absorbed  every  shilling  of  surplus 
value.     The  way  to  do  this  is  by  tireless  and 

213 


214     THE    CASE    FOR   CAPITALISM 

unrelenting  inroads  upon  rent  and  interest. 
The  daily  and  weekly  Socialist  bulletins  should 
tell,  not  of  some  trivial  success  at  a  municipal 
election,  or  of  some  unusually  flowery  flow  of 
poppy-cock  in  Parliament,  but  of  wages  so 
raised  that  rent-mongers  and  profiteers  find 
their  incomes  pro  tanto  reduced.  And  there  is 
no  other  way.  Profits  are  in  substance  nothing 
but  rent.  Rent,  whatever  its  form,  reduced  to 
its  elements,  is  nothing  more  and  nothing  less 
than  the  economic  power  which  one  man  exer- 
cises more  or  less  oppressively  over  another 
man  or  body  of  men.  Destroy  the  power  to 
exact  rent  and  ipso  facto  rent  is  destroyed. 
This  is  the  only  way  of  salvation,  of  emancipa- 
tion— the  only  possible  release  from  bondage." 
Here  we  find  the  assumption  that  surplus  value 
is  produced  by  labour  and  absorbed  by  some- 
body else.  In  fact,  as  we  have  seen  in  our 
analysis  of  the  previous  chapters,  labour  pro- 
duces surplus  value  with  the  assistance  of 
management,  materials  and  tools,  which  are 
supplied  to  it  by  other  people,  and  takes  a 
large  part  of  that  surplus  value  for  itself,  since 
its  own  product,  if  it  had  not  this  assistance, 
would  be  nothing  but  what  it  could  gather  in 
the  woods  or  scrape  'out  of  the  ground  with  its 
finger-nails. 


THE   GUILD    PROGRAMME      215 

In  their  contempt  for  the  State  Socialists, 
the  present  writers  are  just  as  earnest  as 
Mr.  Cole,  and  express  themselves  still  more 
vigorously  :  "  Is  it  any  wonder,"  they  ask  (page 
16),  "  that  politics  now  stink  in  the  workman's 
nostrils  and  that  he  has  turned  firmly  to  '  direct 
action'?  Had  a  living  Socialist  Party  found 
itself  in  Parliament,  instead  of  the  present 
inert  Labour  Party,  led  by  charlatans  and  sup- 
ported by  Tadpoles  and  Tapers,  the  energies 
of  Labour  might  possibly  for  a  slightly  longer 
period  have  been  fruitfully  employed  in  the 
political  sphere."  And  on  page  20  we  find 
that  "the  Independent  Labour  Party  exempli- 
fies these  good  and  bad  qualities.  .  .  .  Not  an 
idea  of  the  slightest  vitality  has  sprung  from  it, 
its  literature  is  the  most  appalling  nonsense,  its 
members  live  on  Dead  Sea  fruit.  The  joyous 
fellowship  which  was  its  early  stock-in-trade 
has  long  since  beea  dissipated  ;  the  party  is 
now  being  bled  to  death  by  internal  bickerings, 
dissensions  and  jealousies.  It  is  the  happy 
hunting-ground  of  cheap  and  nasty  party  hacks 
and  organizers,  who  have  contrived  to  make  it, 
not  an  instrument  for  the  triumph  of  Socialism, 
but  a  vested  interest  to  procure  a  political 
career  for  voluble  inefficients." 

Such  is  the  spirit  in  which  the  Guild  cham- 


2i6    THE   CASE    FOR  CAPITALISM 

pions  deal  with  the  work  of  those  who  have 
gone  before  them  in  the  effort  to  improve  the 
lot  of  the  wage-earner.  Does  it  promise  well 
for  harmony  and  team-work  on  the  part  of  the 
Guilds,  if  they  should  be  established  ? 

Like  Mr.  Cole,  the  writers  attach  great  im- 
portance to  the  distinction  between  wages  and 
pay.  It  is  really  very  difficult  for  the  unin- 
structed  outsider  to  understand  this  fine  meta- 
physical distinction.  It  would  seem  at  first 
sight  that  as  long  as  a  man  receives  money,  to 
be  exchanged  into  goods  and  services,  for  work 
which  he  renders  to  the  community,  no  very 
far-reaching  revolution  can  be  achieved  by 
calling  it  pay  instead  of  wages.  However, 
there  evidently  is  some  really  essential  distinc- 
tion since  the  high-priests  of  the  National 
Guilds  lay  so  much  stress  upon  the  matter. 
Let  us  quote  these  writers  again  (page  80) : — 

"  The  bulwark  which  protects  surplus  value 
from  the  wage-earner,  which  secures  it  to  the 
entrepreneur,  is  the  wage  system.  That  is 
why  it  must  be  abolished.  Now  let  us  suppose 
that  the  work  of  the  London  docks  were  done, 
not  by  more  or  less  casual  wage  slaves,  but  by 
a  properly  organized  and  regimented  labour 
army,  penetrated  by  a  military  spirit  attuned  to 
industry." 


THE    GUILD   PROGRAMME      217 

It  may  be  observed  by  the  way  that  after 
Mr.  Cole's  vigorous  protest  against  the  '*  regi- 
mentation "  involved  by  State  Socialism,  it  is 
rather  sad  to  find  these  authorities  on  National 
Guilds. striving  after  a  properly  organized  and 
regimented  Labour  army.  "  Do  soldiers  receive 
wages  ?  "  they  continue  (page  81)  :  "  No,  they 
receive  pay.  '  But,'  cries  the  practical  man 
(and  possibly  even  Mr.  Sidney  Webb),  'what 
earthly  difference  is  there  between  wages  and 
pay  ? '  Let  us  see.  The  soldier  receives  pay 
whether  he  is  busy  or  idle,  whether  in  peace 
or  war.  No  employer  pays  him.  A  sum  of 
money  is  voted  annually  by  Parliament  to 
maintain  the  Army,  and  the  amount  is  paid 
in  such  gradations  as  may  be  agreed  upon. 
Every  soldier,  officer  or  private,  becomes  a 
living  integral  part  of  that  Army.  He  is  pro- 
tected by  military  law  and  regulations.  He 
cannot  be  casualized,  nor  can  his  work,  such  as 
it  is,  be  capitalized.  The  spirit  that  pervades 
the  Army  is,  in  consequence,  different  from  the 
spirit  that  dominates  wage  slavery." 

Here  then  we  find  the  real  difference  between 
wages  and  pay.  The  pay  is  voted  by  Parlia- 
ment and  granted  to  the  worker,  whether  he 
is  busy  or  idle.  This  is  the  same  view  as  was 
expressed   by    Mr.    Cole   when    he    spoke    of 


2i8     THE    CASE    FOR   CAPITALISM 

"  recognition  and  payment  as  a  human  being, 
and  not  merely  as  the  mortal  tenement  of  so 
much  labour  power  for  which  an  efficient 
demand  exists."  Once  more  we  have  to  ask, 
would  such  a  system  of  payment  produce  good 
work  ?  I  once  heard  this  question  raised  before 
an  audience  that  knows  more  than  anybody 
else  about  the  answer.  It  was  when  I  was 
lecturing  at  the  back  of  the  front  in  Belgium 
in  March  191 8.  My  subject  was  National 
Finance,  but  in  the  discussion  which  followed, 
this  point  about  wages  and  pay  was  introduced 
by  a  private  who  appeared  to  be  a  disciple  of 
the  Guildsmen.  Why,  he  asked  in  effect,  can- 
not wage-earners  be  paid  just  as  soldiers  are 
paid  ?  I  answered  that  it  was  not  quite  evident 
that  in  ordinary  life  we  should  get  good  work 
by  this  system.  "  Everybody  knows,"  I  said, 
"  how  you  soldiers  work  when  you  are  fighting, 
but  when  you  go  out  to  do  fatigue  work  " — and 
a  roar  of  laughter  from  the  rest  of  the  audience 
made  the  roof  of  the  big  hut  ring,  and  left 
no  more  for  me  to  say. 

As  it  happened  I  had  been  reading  Mr. 
Orage  at  home  not  long  before,  and  had  pointed 
out  his  remarks  about  the  spirit  of  the  Army 
to  an  officer  just  back  from  the  front ;  he 
observed  that  anybody  who  had  seen  soldiers 


THE   GUILD    PROGRAMME      219 

doing  any  fatigue  job  would  know  that  at  least 
three  times  as  much  work  would  be  done  by 
wage-earners  under  civilian  conditions.  If  then 
the  workers  worked  with  the  fatigue  spirit  of 
the  Army  instead  of  the  battle  spirit,  there 
would  be  an  awkward  dwindling  in  the  funds  out 
of  which  their  pay  could  be  annually  voted  by 
Parliament.  Parliament  might  vote  the  money, 
but  unless  goods  and  services  were  turned  out, 
that  money  would  be  worth  only  scraps  of 
paper.  Moreover,  the  soldier  is  not  only 
"protected  by  military  law  and  regulations," 
he  is  also  bound  by  them  and  liable  to  very 
severe  penalties  if  he  breaks  them.  Is  in- 
dustrial militarism  really  the  ideal  of  Messrs. 
Hobson  and  Orage.** 

They  go  into  more  detail  than  Mr.  Cole  in 
reference  to  the  arrangements  under  which 
the  workers  would  be  paid.  On  page  146  we 
find  that  "once  a  member  of  his  Guild,  no 
man  need  again  fear  the  rigours  of  unemploy- 
ment or  the  slow  starvation  of  a  competitive 
wage.  Thus  every  transport  worker,  providing 
he  honestly  completes  the  task  assigned  him, 
will  be  entitled  to  maintenance — a  maintenance 
equal  to  his  present  wage,  plus  the  amount 
now  lost  by  unemployment,  plus  a  proportion 
qf  existing    surplus    value — that    is,   plus   his 


220     THE   CASE    FOR   CAPITALISM 

present  individual  contribution  to  rent  and 
interest ;  and,  finally,  plus  whatever  savings 
are  effected  by  more  efficient  organization. 
He  will  not,  therefore,  receive  wages  (as  we 
now  know  them),  because  he  will  receive 
something  much  greater — possibly  three  times 
greater  than  the  existing  wage  standard," 

Here  we  find  two  difficulties.  "  Once  a 
member  of  his  Guild  " — one  is  brought  up  by 
the  question,  how  will  membership  of  these 
Guilds  be  arranged  ?  At  present  people  do 
have  more  or  less  choice  of  the  kind  of  occupa- 
tion in  which  they  will  spend  the  working  part 
of  their  lives.  In  the  case  of  most  of  us,  it 
is  true,  economic  fate  or  hazard  marks  out 
some  course  for  us,  and  in  most  cases  the 
choice,  such  as  it  is,  is  made  long  before  we 
can  be  said  to  have  minds  to  make  up  on 
the  subject,  and  still  longer  before  we  have 
sufficient  experience  and  knowledge  to  exercise 
the  choice  well.  Nevertheless,  some  choice 
there  is,  and  it  is  possible  and  does  happen, 
that  people  who  have  made  a  wrong  choice, 
or  think  so,  can  later  in  life  change  from  one 
occupation  to  another.  But  how  much  freedom 
would  these  oroanized  and  reoimented  Guilds 
allow  to  any  aspiring  youth  who  wanted  to 
become  a  member,  and  by  what  methods  and 


THE   GUILD    PROGRAMME      221 

by  whose  decision  would  the  difficult  question 
be  solved  as  to  the  entry  of  the  young  workers 
into  the  different  lines  of  occupation  ? 

These  questions  clearly  involve  endless  pos- 
sibilities of  friction.  They  are  faced  in  a  book 
called  The  Meaning  of  National  Guilds  by 
C.  E.  Bechhofer  and  M.  B.  Reckitt  who  show 
more  capacity  than  other  Guild  champions  for 
seeing  practical  details  and  trying  to  deal  with 
them.  On  page  310  they  say  that  "each  man 
will  be  free  to  choose  his  Guild,  and  actual 
entrance  will  depend  on  the  demand  for  Labour. 
In  fact  the  principle  will  be  that  of  first  come, 
first  served.  In  the  event  of  there  being  no 
vacancy,  it  will  be  open  for  the  applicant  either 
to  apply  for  entrance  to  another  Guild,  or 
during  his  period  of  waiting  to  take  up  some 
occupation  of  a  temporary  character.  .  .  . 
Labour  in  *  dirty  industries  ' — scavenging,  etc. 
— will  probably  be  in  the  main  of  a  temporary 
character,  and  will  be  undertaken  by  those  who 
are  for  the  time  unable  to  obtain  an  entry 
elsewhere." 

This  is  all  very  sensible  and  practical,  but 
it  is  not  a  very  comfortable  prospect  for  the 
aspiring  Guildsman.  If  he  has  to  wait  till 
he  is  wanted,  where  is  his  freedom  to  choose 
his  Guild?     He  will   be  no  better  off  in  this 


222     THE   CASE    FOR   CAPITALISM 

respect  than  he  is  now  under  capitalist  tyranny, 
and  will  find  himself  in  the  meantime  relegated 
to  a  drain-cleaning  job.  Moreover,  the  same 
authorities  tell  him  that  in  extreme  circum- 
stances, a  Guildsman  will  be  liable  to  expulsion. 
And  what  will  become  of  him  after  that  ? 

Again  we  find  that  according  to  Messrs. 
Hobson  and  Orage  every  worker  would  be 
entitled  to  maintenance,  "  providing  he  honestly 
completes  the  task  assigned  to  him."  Who 
is  to  decide  concerning  the  honesty  of  the 
completion  of  the  task  ?  Presumably  the  deci- 
sion will  be  arrived  at  by  the  Guild  officers 
elected  by  the  workers.  And  here  again  we 
see  the  possibility  that  those  Guild  foremen 
will  be  most  popular,  and  therefore  most  likely 
to  be  elected,  who  will  take  the  most  lenient 
views  concerning  the  honesty  of  the  work  done 
by  the  Guildsmen.  Whether  this  system  will 
be  conducive  to  brisk  production  can  only  be 
very  seriously  doubted,  and  we  are  left  wonder- 
ing what  is  going  to  happen  to  the  unfortunate 
worker,  who  justly  or  unjustly  is  condemned 
as  not  having  honestly  completed  the  task 
assigned  to  him.  Apparently  in  this  case  he 
will  not  be  entitled  to  maintenance.  If  so, 
what  becomes  of  that  most  attractive  arrange- 
ment  under   which    the    National    Guilds   are 


THE   GUILD   PROGRAMME     223 

to  assure  to  the  worker  recognition  and  pay- 
ment as  a  human  being,  and  not  merely  as  the 
mortal  tenement  of  so  much  labour  power  for 
which  an  effective  demand  exists?  Such, 
combined  with  the  right  "to  make  well  or  ill," 
was  Mr.  Cole's  ideal,  but  Messrs.  Hobson- 
Orage  are  only  going  to  assure  the  worker 
payment,  not  even  as  the  tenement  of  labour 
power,  but  as  an  honest  and  efficient  producer 
of  it.  But  they  go  on  to  strike  a  loftier  note 
and  to  say  that  (page  147)  "after  all  main- 
tenance is  not  the  only  consideration  in  life." 
This  is  very  true,  but  without  a  certain  amount 
of  it  life  is  impossible.  In  fact  they  seem  to 
expect  that,  under  the  Guild  system,  hard 
times  may  have  to  be  faced  and  that  nobody 
will  mind.  On  page  1 1 1  we  read:  "Nobody 
doubts  that  the  majority  of  wage-earners  would 
be  willing,  any  one  of  them  at  any  moment, 
to  exchange  their  position  as  wage-earners  for 
the  position  of  economic  independence,  even 
if  this  latter  involved  a  permanent  reduction 
of  financial  income ;"  and  on  page  113:  "We 
may  find  ourselves,  in  fact,  if  we  abolish  wage 
slavery,  worse  off  than  we  are  now." 

If  the  wage-earners  got  real  freedom, 
probably  many  of  them  might  be  willing  to 
be   worse   off.      But    it    has   been    shown   that 


224     THE   CASE    FOR   CAPITALISM 

under  the  Guilds  their  freedom  would  still 
be  qualified  by  the  limits  that  are  imposed 
on  that  of  all  of  us  who  work  for  others,  who 
work  for  us.  And  if  a  lower  standard  all  round 
is  to  be  the  result  of  the  Guild  system,  it  clearly 
will  not  lead  us  to  the  better  world  that  can 
only  be  won  by  hard  and  efficient  work,  and 
a  greater  output  of  material  goods,  giving  us 
a  chance  of  winning  goods  that  are  more 
important. 

Moreover,  from  page  136  of  the  same  book  : 
"Even  if  the  process  of  wage  approximation  goes 
much  further  than  we  now  foresee,  it  is  never- 
theless inevitable  that  graduations  of  position 
and  pay  will  be  found  necessary  to  efficient 
Guild  administration.  We  do  not  shrink  from 
graduated  pay  ;  we  are  not  certain  that  it  is  not 
desirable.  There  will  be  no  inequitable  distri- 
bution of  Guild  resources,  we  may  rest  assured  ; 
democratically  controlled  organizations  seldom 
err  on  the  side  of  generosity.  But  experience 
will  speedily  teach  the  Guilds  that  they  must 
encourage  technical  skill  by  freely  offering 
whatever  inducements  may  at  the  time  most 
powerfully  attract  competent  men.  There  are 
many  ways  by  which  invention,  organizing 
capacity,  statistical  aptitude  or  what  not  may  be 
suitably  rewarded.     It  is  certain  that  rewarded 


THE   GUILD   PROGRAMME     225 

these  qualities  must  be."  So  that  even  under 
the  Guilds  there  are  to  be  considerable  differ- 
ences in  the  rates  of  the  reward  given  to  various 
kinds  of  workers.  This  admission  is  of  course 
entirely  sensible  and  encouraging  for  the  future 
efficiency  of  the  Guilds  if  ever  they  come  into 
being.  At  the  same  time  it  opens  the  door  to 
a  good  deal  of  possible  friction  and  jealousy, 
seeing  that  the  rates  of  pay  will  have  to  be 
decided  by  officers  elected  by  those  who  are 
going  to  receive  the  payment.  And  further,  is 
it  not  an  abandonment  of  the  whole  ideal  under 
which  the  labourer  is  supposed  to  receive  the 
whole  of  what  he  produces  ?  If  "  organization, 
invention,  statistical  aptitude  or  what  not "  are 
to  be  suitably  rewarded,  are  not  the  Guilds,  as 
private  capitalists  are  alleged  to  do  now,  going 
to  compel  the  worker  to  produce  surplus  value, 
which  he  will  not  be  allowed  to  consume  ? 

However,  such  is  the  robust  belief  of  these 
writers  in  the  perfection  of  the  natures  of  every- 
body who  belongs  to  a  Guild,  that  they  remark 
on  page  148  :  "  Nor  need  we  shrink  from  the 
further  conclusion  that  the  appointment  of  a 
hierarchy  involves  a  suitable  form  of  graduated 
pay.  ...  In  this  connection,  we  pin  our  faith 
to  the  democratic  idea  without  reserve.  We 
believe  the  workman  is  the  shrewdest  judge  of 


226     THE   CASE    FOR   CAPITALISM 

good  work  and  of  the  competent  manager. 
Undistracted  by  irrelevant  political  notions,  his 
mind  centred  upon  the  practical  affairs  of  his 
trade,  the  workman  may  be  trusted  to  elect  to 
higher  grades  the  best  men  available.  In  the 
appointment  of  their  check-weighmen,  for 
example,  the  miners  almost  never  make  a  mis- 
take. Doubtless  injustices  will  from  time  to 
time  be  perpetrated  ;  but  they  will  be  few  com- 
pared with  the  million  injustices  done  to-day  to 
capable  men  who  are  habitually  ignored  in  the 
interests  of  capitalist  cadets."  This  pleasant 
trusting  faith,  which  imagines  that  because 
workmen  can  elect  capable  check-weighmen, 
they  will  also  be  able,  without  any  further 
education  or  experience,  to  choose  the  right 
people  to  manage  the  whole  organization  of 
industry,  is  a  pleasing  spectacle  in  these  cynical, 
sceptical  days,  and  one  would  be  sorry  to  disturb 
it.  But  it  must  be  observed  that  the  higher 
rates  of  pay  to  be  granted  to  this  "hierarchy," 
and  also  to  "  inventive  organizing  capacity, 
statistical  aptitude,  or  what  not "  will  make  a 
big  hole  in  the  whole  of  the  produce.  If,  as 
quoted  above,  labour's  emancipation  can  only 
become  possible  when  it  has  absorbed  every 
shilling  of  surplus  value,  its  emancipation  will 
still    be    remote,    when   all    these   highly  paid 


THE   GUILD   PROGRAMME      227 

statisticians  and  hierarchs  are  exacting  what 
will  look  very  much  like  rent,  as  defined  by 
our  authors  in  the  same  passage.  If  the  capi- 
talistic manager's  salary  is  only  to  be  replaced 
by  the  Guild  hierarch's  higher  pay,  will  the 
difference  be  really  essential  ?  Every  one  who 
has  read  Dumas  remembers  how  Chicot  the 
Jester  induced  Frere  Gorenflot  to  eat  a  fowl 
on  Friday  by  making  him  christen  it  a  carp. 
But  Gorenflot  wanted  to  eat  the  fowl  and  was 
quite  ready  to  be  humbugged.  Will  that  very 
shrewd  person,  the  British  wage-earner,  be 
equally  ready  to  be  duped  by  a  change  of  name, 
when  he  is  asked  to  hand  over  **  surplus  value  " 
to  hierarchs  instead  of  managers  ? 

Messrs.  Hobson-Orage  admit  frankly  the 
likelihood  of  strife  between  the  various  Guilds. 
"We  may  expect,"  they  say  (page  228),  "dis- 
satisfaction among  the  weaker  Guilds  when  the 
stronger  from  time  to  time  impose  their  wills, 
that  is,  in  the  last  resort,  exercise  their  '  pull.' 
In  what  direction,  then,  can  we  reasonably 
anticipate  dissatisfaction,  followed  by  strenu- 
ous agitation  for  rectification  ?  Primarily,  we 
imagine  in  the  value  each  Guild  sets  upon  its 
own  labour,  which  may  be  disputed  by  the 
other  Guilds.  In  our  chapter,  *  The  Finance 
of  the  Guilds,*  we  remarked  that  in  the  earlier 


228     THE   CASE    FOR  CAPITALISM 

stages  the  more  highly-skilled  industries  would 
insist  upon  a  higher  value  being  attached  to 
their  labour  than  to  the  labour  of  the  so-called 
'  unskilled '  groups.  .  .  .  This  struggle,  too,  will 
be  waged  inside  the  several  Guilds  as,  for 
example,  between  the  fitter  and  his  labourer, 
both  members  of  the  same  Guild,  or  the  mason 
and  his  labourer,  also  members  of  another 
Guild.  But  the  domestic  arrangements  of  the 
Guild  do  not  concern  us  here ;  it  is  when  the 
Guilds,  as  such,  come  to  grips  with  other  Guilds 
to  establish  the  general  value  of  their  respective 
work  and  functions  that  the  main  battle  will  be 
joined.  Thus,  agriculture  is  now  poorly  paid. 
.  .  .  But  the  agricultural  Guild  "  [as  arranged 
by  the  writers  in  the  imaginary  group  of  Guilds 
which  they  have  produced]  "  is  numerically  the 
strongest  of  them  all.  May  we  not  then  expect 
strong  action  by  that  Guild  for  a  revaluation  of 
agricultural  work  and  products  ?  .  .  .  Will  the 
claim  for  a  higher  valuation  of  agriculture,  both 
in  its  actual  products  and  as  a  supremely  im- 
portant element  in  our  national  life,  be  met  by 
the  other  Guilds  in  a  niggling  or  in  a  generous 
spirit.''  In  this  connection  it  is  well  to  re- 
member that  even  during  the  past  decade., 
extremely  acrimonious  disputes  have  arisen 
between    existing   trade  unions,  notably  as  to 


THE   GUILD    PROGRAMME      229 

delimitation  of  work,  and  if  such  large  questions 
were  to  be  settled  in  the  same  spirit,  it  would 
prove  of  ill-omen  to  the  future  greatness  of  the 
Guilds,  But  the  Guilds,  as  we  have  pictured 
them,  are  not  the  existmg  unions,  but  the 
unions  plus  the  practical  intellectuals,  the  labour 
and  brains  of  each  Guild  naturally  evolving  a 
hierarchy  to  which  large  issues  of  industrial 
policy  might  with  confidence  be  referred." 

If  the  practical  intellectuals  are  to  include 
such  exponents  of  Guild  doctrine  as  Messrs. 
Cole  and  Hobson-Orage,  the  specimens  which 
have  already  been  quoted  of  their  dialectical 
methods  and  their  controversial  geniality  seem 
to  promise  that  the  world  of  the  National  Guilds 
will  have  a  pleasant  resemblance  to  Donny- 
brook  Fair.  Messrs.  Reckitt  and  Bechhofer  in 
their  book  already  referred  to  dealt  with  the 
question  of  inter-Guild  strife  as  follows  (page 
325).  "A  query  often  brought  to  confound 
National  Guildsmen  is  this  :  What  would  hap- 
pen to  a  National  Guild  that  began  to  work 
wholly  according  to  its  own  pleasure,  without  re- 
gard to  the  other  Guilds  and  the  rest  of  the  com- 
munity ?  We  may  reply,  first,  that  this  spirit 
would  be  as  unnatural  among  the  Guilds  as 
it  is  natural  nowadays  with  the  present  anti- 
communal  capitalist  system  of  industry ; "  [but 


230    THE   CASE    FOR  CAPITALISM 

it  may  be  observed  that  any  anti-communal 
capitalist  who  nowadays  worked  wholly  accord- 
ing to  his  pleasure  without  regard  to  the  rest  of 
the  community  would  very  soon  be  bankrupt, 
because  the  rest  of  the  community  would  not 
buy  his  goods].  "  Secondly,  if  it  did  arise  in 
any  Guild,  this  contempt  for  the  rest  of  the 
community  would  be  met  by  the  concerted 
action  of  the  other  Guilds.  ...  A  Guild,  how- 
ever, that  thought  itself  ill-used  by  its  fellows 
v/ould  be  able  to  signify  its  displeasure  by  the 
threat  of  a  strike ;  but  it  is  to  be  hoped  that 
there  will  be  sufficient  machinery  for  the  suc- 
cessful settlement  of  inter-Guild  dealings  that 
occasion  for  this  would  seldom  arise." 

But  a  still  more  serious  source  of  inter-Guild 
friction  is  suggested  by  the  latest  book  on  the 
subject,  The  Guild  State  by  G.  R.  Stirling 
Taylor,  which  appeared  in  the  autumn  of  1919. 
This  writer  actually  suggests  competition  be- 
tween the  Guilds.  This  seems  to  be  quite 
contrary  to  the  doctrines  of  the  earlier  champions 
who,  unless  I  have  altogether  misunderstood 
them,  intended  the  Guilds  to  cover  the  whole 
of  the  industry  concerned.  "The  Guild,"  said 
Messrs.  Hobson-Orage  on  page  132,  "means 
the  regimentation  into  a  single  fellowship  of  all 
those  who  are  employed  in  any  given  industry." 


THE   GUILD   PROGRAMME     231 

Mr.  Cole  told  us  (page  132)  that  "  only  an  Indus- 
trial Union,  embracing  the  whole  personnel  of 
an  industry,  can  assume  control  over,  that 
industry."  This  seems  to  be  an  essential  part 
of  the  whole  scheme.  But  now  comes  Mr. 
Stirling  Taylor  and  observes  (page  95)  that : 
''Surely  there  will  be  many  advantages,  if  just 
a  healthy  competition — and  not  more  than 
healthy,  remember — can  be  maintained  in  a 
town  between,  for  example,  a  reasonable 
number  of  competing  bakers'  Guilds." 

There  certainly  will  be  many  advantages  to 
the  consumer,  but  this  new  element  in  the 
Guild  State  seems  to  upset  the  whole  struc- 
ture that  has  been  built  up  by  its  former 
advocates.  What  becomes  of  the  control  of 
production  and  its  product  that  Mr.  Cole 
believes  to  be  necessary  to  the  worker  if  he 
is  to  be  set  free  from  his  "  degraded  status," 
if  the  Guilds  have  to  compete  for  the  custom 
of  the  consumer  by  producing  what  he  wants 
in  competition }  What  becomes  of  the  workers' 
right  of  choosing  "whether  they  will  make 
well  or  ill  ".-*  Under  competition  the  consumer 
prefers  things  that  are  made  well,  if  he  is  able 
to  distinguish  them.  Once  more  we  are  left 
wondering  what  it  all  means. 

Finally  let  us  see  how  the  Guildsmen  pro- 


232     THE    CASE    FOR   CAPITALISM 

pose  to  deal  with  the  capitalist,  the  man 
who  owns  the  plant  and  takes  the  risk  of  pro- 
ductive failure.  He  is  just  to  be  relieved  of 
his  property,  and  Messrs.  Hobson-Orage  call 
attention  to  the  great  advantage  of  this  plan 
over  that  of  the  State  Socialists,  whom  they 
credit  with  the  intention  of  buying  him  out. 
On  page  179  of  their  book  they  ser.  out  the 
advantage  in  the  form  of  an  equation  as 
follows : — 

"Cost  of  production  under  State  Socialism 
=  raw    material  -f  standing    charges  +  rent  + 
interest  +  profits  +  increased   wages.     Cost  of 
production      under     Guild      Socialism  =  raw 
material  +  standing  charges  +  pay." 

And  on  page  240  they  develop  Mr.  Cole's 
suggestion  of  "  catastrophic  action  or  general 
strike "  in  detail  in  the  form  of  a  dialogue 
between  a  Guild  deputation  and  the  Chairman 
and  General  Manager  of  a  large  industrial  enter- 
prise that  divides  ^100,000  a  year  amongst  its 
shareholders.  The  deputation  admits  that  the 
company  pays  standard  rates  of  wages,  but 
says  it  has  decided  that  the  men  shall  no 
longer  work  on  a  wage  basis.  In  the  first 
place,  the  men  now  on  the  pay-rolls  must  con- 
tinue there  whether  there  is  work  for  them  or 
not.     The  Guild  is  going  to  "assume  partner- 


THE    GUILD    PROGRAMME      233 

ship  "  in  the  business,  supplying  the  labour  and 
taking  half  the  profits.  In  five  years'  time,  it 
intends  to  take  another  slice  of  the  profits.  It 
asks  whether  the  shareholders  would  rather 
have  ^50,000  or  nothing  ?  When  the  General 
Manager  raises  the  question  of  the  future 
supply  of  capital,  the  deputation  airily  observes  : 
"Come  to  us  and  we  will  arrange  it.  You  will 
find  us  as  partners,  always  glad  to  co-operate," 
and  ends  the  discussion,  which  goes  on  for  some 
pages,  by  saying  :  "By  all  means  call  together 
your  shareholders,  but  you,  of  course,  under- 
stand that  we  are  quite  indifferent  what  they 
say  or  do.  Unless  our  proposals  are  accepted 
in  a  month,  we  shall  close  down  your  works." 
At  the  end  of  this  passage  the  writers  re- 
mark, with  perhaps  pardonable  pride,  that 
"  Samuel  Johnson  always  '  gave  the  Whig  dogs 
the  worst  of  it,'  and  perhaps  in  this  discussion 
we  have  given  the  exploiters  the  worst  of  it." 
By  the  exploiters  they  presumably  mean  the 
Chairman  and  General  Manager  representing 
the  owners  of  the  factory.  What  the  deputa- 
tion practically  says  is  that  they  mean  to  take 
from  the  owners  of  the  factory  the  interest  and 
profit  to  which  they  are  entitled  in  return  for 
its  use  in  production.  One  wonders  what  would 
happen  if  the  Chairman  and  General  Manager 


234    THE   CASE    FOR  CAPITALISM 

were  to  answer,  as  they  most  probably  would  : 
*•  Very  well,  you  are  going  to  make  terms  on 
which  it  is  impossible  for  our  shareholders  to 
receive  any  interest  or  dividends  on  their 
undertaking ;  we  cannot  accept  these  terms, 
and  we  will  dispense  with  the  services  of  those 
whom  you  represent  until  they  are  ready  to 
work  at  the  union  rates  which  we  have  always 
paid."  Would  the  capitalist  be  altogether  help- 
less ?  It  might  not  be  safe  to  be  quite  certain 
that  he  would.  On  a  later  page  (282)  the 
writers  ask :  "  Falling  back  upon  their  undoubted 
legal  rights  to  the  instruments  of  production  and 
distribution,  what  could  they  (the  profiteers)  do  ?" 
But  with  astonishing  inconsistency  they  suggest 
that:  "In  exchange  for  their  present  posses- 
sion of  land  and  machinery,  the  State  might 
give  them,  as  rough-and-ready  justice,  an 
equitable  income  either  for  a  fixed  period  of 
years  or  for  two  generations."  Then  what 
becomes  of  that  beautiful  "  equation  "  showing 
the  advantage  of  Guild  over  State  Socialism  ? 
And  in  any  case,  when  the  existing  capitalist 
has  been  dealt  with,  the  Guilds  will  have  to 
provide  fresh  capital,  and  will  have  to  pay  for 
it.  The  capital  goods — machinery,  etc. — needed 
by  the  Guilds  will  have  to  be  made  by  some- 
body who  will  have  to  be  supported  and  sup- 


THE   GUILD   PROGRAMME      235 

plied  with  material  out  of  "  surplus  value." 
And,  ^if  there  is  to  be  any  progress,  risks  will 
have  "to  be  taken  with  experiments,  and  some 
one  will  have  to  pay  for  failures.  Capital,  as 
always,  will  have  to  be  paid  its  wage — or 
receive  its  pay. 

Such  is  the  tissue  of  inconsistencies  and 
difficulties  that  is  involved  by  the  system  of 
National  Guilds  as  so  far  expounded.  The 
evident  sincerity  and  earnestness  of  its  advo- 
cates cannot  blind  us  to  the  fact  that  their 
scheme  has  not  yet  been  thought  out  in  a 
workable  shape,  and  that,  as  they  themselves 
acknowledge,  it  might  lead  to  a  lowering  of 
the  workers'  standard  of  comfort,  while  it  is 
hard  to  see  that  they  would  gain  any  real 
increase  of  freedom.  That  it  might  also  result 
in  serious  disputes  and  disagreements,  both 
within  and  between  the  Guilds,  is  admitted 
by  its  advocates ;  and  the  temper  in  which 
they  flout  the  work  and  efforts  of  the  older 
Socialists  and  others  who  are  trying  to  im- 
prove the  lot  of  the  wage-earners  by  other 
methods  makes  one  doubt  whether  they  have 
it  in  them  to  put  forward  a  great  and  sound 
reform.  Such  work  is  not  often  done  in  such 
a  spirit. 


CHAPTER   XI 

CAPITALISM    AND    FREEDOM 

In  putting  the  case  for  Capitalism  in  the 
foregoing  chapters,  I  have  by  no  means  meant 
to  argue  that  it  is  the  best  possible  economic 
system,  only  that  it  has  worked  wonders,  and 
can  work  still  better  wonders  in  the  future 
and  that  we  cannot  be  sure  that  any  other 
system  that  has  yet  been  suggested  will  do 
as  well.  I  have  tried  to  show  that  under  it 
the  capitalist — the  man  who  owns  the  plant 
and  material  and  takes  the  risk  of  enterprise — 
does  not  rob  the  wage-earner  of  "  surplus 
value "  created  by  the  latter,  because  th.e 
surplus  value  is  due  to  the  existence  of  the 
plant,  and  is  shared  by  the  wage-earner  through 
the  far  better  standard  of  life  that  the  equip- 
ment of  industry  has  enabled  him  to  secure. 
Without  the  plant,  the  labourer  could  only 
supply  himself  with  a  bare  subsistence,  if  that. 
It  is  true  that  most  of  the  plant  has  been 
made  or  put  where  it  is  wanted  by  the  manual 

236 


CAPITALISM   AND   FREEDOM     237 

effort  of  wage-earners,  but  this  was  only  pos- 
sible because  wage-earners  were  paid  to  do 
so,  under  direction  supplied  by  capitalists,  by 
capitalists  who  thereby,  instead  of  spending 
their  incomes  on  immediate  enjoyment,  invested 
part  of  it,  always  with  more  or  less  risk,  in 
furnishing  industry  with  equipment  for  an  ever- 
expanding  output,  so  creating  surplus  value  not 
only  for  themselves,  but  for  the  whole  nation, 
and  for  the  whole  economically  civilized 
world. 

By  making  this  investment  and  taking  this 
risk,  and  applying  labour  under  expert  direction 
to  the  task  of  providing  industry  with  plant 
in  the  widest  sense  of  the  word.  Capitalism 
has  made  an  enormous  increase  in  population 
possible,  and  has  put  control  over  the  forces 
of  Nature  into  the  hands  of  active  enterprising 
venturers  who  certainly  might  have  made 
better  use  of  it,  but  have  this  excuse,  that 
they  were  bound,  in  their  search  for  profit, 
to  work  to  meet  the  demand  of  the  average 
consumer,  whose  quaint  foibles  in  the  matter 
of  demand  have  resulted  in  the  production  of 
a  great  deal  of  ugliness  and  rubbish.  But  in 
spite  of  all  that  the  fastidious  may  urge,  on 
artistic,  moral  and  common-sense  grounds, 
against   the   use    that    has    been    made   under 


238     THE   CASE    FOR   CAPITALISM 

Capitalism  of  the  new  powers  which  the 
Industrial  Revolution  has  given  to  man,  there 
is  plenty  to  be  said  on  the  other  side  of  the 
account.  We  have  done  things  worth  doing 
under  Capitalism.  Sir  Leo  Chiozza  Money  in 
an  article  in  the  Observer  of  November  23, 
19 1 9,  told  us  that:  "With  coal  we  create  an 
export  surplus  of  manufactures ;  with  that 
export  surplus  we  purchase  food  and  materials 
to  feed  our  population  and  our  factories,  and 
thus  obtain  the  means  to  create  a  further 
export  surplus  to  import  more  food  and 
materials.  This  process,  continued  during  a 
period  of  five  generations,  changed  the  poor 
and  backward  agricultural  Britain  of  1750  into 
the  comparatively  wealthy  State  which  found, 
at  the  opening  of  the  nineteenth  century,  the 
means  to  fight  Napoleon,  and,  a  century  later, 
the  means  to  destroy  German  militarism." 

It  is  only  fair  to  Sir  Leo  to  observe  that 
he,  being  a  convinced  and  earnest  Socialist, 
doubtless  believes  that  economic  progress  would 
have  been  much  greater  and  better  under  some 
form  of  Collectivist  management  than  it  has 
been  under  Capitalism.  And  he  may  be  right. 
But,  as  Aristotle  says,  "the  fact  is  the  starting 
line,"  and  the  fact  is  that  these  things  were 
done  under  Capitalism,  and  that  under   it,   as 


CAPITALISM   AND    FREEDOM     239 

shown  on  a  previous  page,^  many  millions  of 
people  were  born  and  lived  a  life  that  had 
a  good  deal  of  comfort  and  jollity,  and  a  certain 
amount  of  real  nobility  mixed  up  in  its  queer 
salad-bowl,  who  never  would  have  seen  the 
light  without  the  industrial  development  that 
was  in  fact  worked  out  under  Capitalism.  Far 
from  robbing  anybody  of  surplus  value,  Capi- 
talism is  like  a  benevolent  ancestor  who, 
instead  of  consuming  all  the  port  that  he  could 
get — as  some  ancestors  did — laid  down  an 
enormous  cellar  of  it  for  the  use  of  future 
generations.  And  every  one  who  is  now  alive 
in  this  country,  and  millions  abroad  likewise, 
are  now  able  to  help  themselves  to  bottles  of 
the  grand  old  vintage  then  laid  down  and  now 
ready  for  us,  crusted,  fruity,  full  of  ripe  flavour 
and  rich  bouquet.  For  none  of  us  could  have 
been  so  well  off,  and  many  of  us  could  not 
have  been  born  at  all,  if  Capitalism  had  not 
done  this  deed,  and  done  it  judiciously  and 
well.  We  all  thus  drink  of  the  bottles  laid 
down  by  those  who  went  before  us,  those  of 
us  who  work,  because  our  work  could  not  have 
been  so  well  rewarded  if  we  had  not  been 
members  of  a  productively  efficient  community, 
those  who  cannot,  will  not,  or  do  not  work, 
^  Page  114. 


240    THE   CASE    FOR   CAPITALISM 

because  it  would  not  have  been  possible  for 
our  needs  to  be  provided  as  well  as  they  are 
now.  That  some  people  have  access  to  some 
of  the  bottles  as  a  matter  of  legal  right,  is  only 
because  this  privilege  has  been  handed  on  to 
them  by  those  who  laid  down  the  cellar.  If 
we  took  their  right  away,  there  would  be  a  few 
more  bottles  for  the  rest  of  us  while  the  cellar 
lasted,  but  would  the  process  of  laying  down 
for  those  who  come  after  us  be  likely  to 
continue  on  this  voluntary  basis  ?  It  would 
most  probably  have  to  be  done  by  officials  or 
Committees.  Their  efforts  might  appear  at 
first  sight  to  be  cheaper  than  those  of  the 
private  benefactor,  who  took  a  consideration 
for  his  forethought  when  he  could  earn  it,  but 
might  cost  the  community  dear  in  the  long 
run  if  they  laid  down  the  wrong  vintage  or 
were  too  timid  to  try  new  brands. 

Such  is  the  debt  that  all  of  us  owe  to  the 
capitalists  of  the  past.  But  when  we  have 
taken  off  our  hats  to  them  and  acknowledged 
it,  we  have  to  give  our  minds  to  reforming 
and  improving  the  Capitalism  of  the  present. 

In  our  studies  of  the  schemes  that  have  been 
put  forward  for  improving  the  economic  system, 
we  have  found  many  aspirations  that  were 
highly  desirable   if  they  could    be    made   into 


CAPITALISM   AND  FREEDOM     241 

practical  facts,  but  did  not  seem  likely  to  be 
carried  out  by  the  proposed  reforms,  or  only 
at  the  cost  of  loss  of  efficiency  in  output.  First 
among"  these  comes  the  desire  for  economic 
freedom.  Most  of  us  will  admit  that  freedom 
is  the  most  precious  jewel  that  we  can  gain, 
and  that  without  a  certain  amount  of  it  no 
one's  mind  and  character  can  achieve  real 
growth,  any  more  than  his  legs  can  grow  if 
they  are  encased  in  plaster  of  Paris.  Economic 
freedom  means  to  most  of  us  freedom  to  work 
or  not  to  work,  or  if  we  do  work,  freedom  to 
work  to  please  ourselves  and  not  at  the  bidding 
of  anybody  else.  In  this  sense  it  is  not  pos- 
sible to  the  great  majority  of  mankind  because 
we  all  have  to  work  unless  we  can  induce 
somebody  else  to  keep  us  alive,  and  the  work 
that  we  do  has  to  be  pleasing  to  somebody  in 
order  to  make  him  give  us  in  return  for  it  the 
money  with  which,  by  our  choice  of  the  goods 
that  we  buy,  we  exercise  control  over  the  work 
of  others  and  make  them  turn  out  things  that 
we  want.  In  other  words,  we  sacrifice  freedom 
as  producers  in  order  to  increase  our  freedom 
as  consumers. 

A  few  can  induce  others  to  keep  them  alive, 
and  in  some  cases  exceedingly  comfortable,  by 
the    claims    that    they    exercise   as    hereditary 

Q 


242     THE   CASE    FOR   CAPITALISM 

owners  of  the  equipment  of  industry  in  the 
widest  sense  of  the  phrase,  including  land.  A 
few  others  can  do  it  by  appealing  to  the  com- 
munity's sympathy  owing  to  physical  and  other 
inability  to  work.  Most  of  us  have  to  work, 
and  to  please  others  by  so  doing.  If  we  lived 
in  a  wilderness  and  worked  only  for  ourselves, 
we  should  still  have  to  work,  but  only  to  please 
ourselves.  Our  control  of  goods  would  thereby 
be  very  greatly  lessened,  and  would  economic 
freedom,  so  gained,  be  really  good  for  us  ?  Is 
it  not  better  that  we  should  be  forced  to 
co-operate  in  order  to  enjoy,  and  to  secure 
a  good  life  for  ourselves  by  helping  to  provide 
what  others  want  ?  Those  of  us  who  take 
this  democratic  view  must  be  ready  to  be  blud- 
geoned with  examples  of  the  great  artist  pros- 
tituting his  brush  to  boil  his  pot,  and  of  the 
poet  who  starves  because  an  ignorant  public 
does  not  want  the  sonnets  that  the  Muses  bid 
him  sing.  These  are  special  cases  of  special 
gifts,  and  one  cannot  feel  sure  that  the  artist 
or  the  poet  would  fare  better  at  the  hands 
of  a  Socialist  Treasury  Committee  or  of  an 
Academy  appointed  by  the  Guildsmen.  But 
for  the  ordinary  workaday  goods  of  life,  there 
seems  to  be  something  pleasant  and  really 
"  social "  and   sociable   in   this  dependence  on 


CAPITALISM   AND   FREEDOM     243 

the  judgment  of  others  on  our  work ;  and  a 
restriction  of  economic  freedom  that  makes 
everybody  work  to  please  others,  is  very 
similar  to  the  restriction  on  social  freedom, 
which  only  allows  people  to  do  as  they  please 
as  long  as  they  obey  the  laws  of  the  com- 
munity, and  do  not  allow  their  liberty  to  be 
a  nuisance  to  others  and  a  restriction  on  theirs. 

If  the  decision  about  what  is  to  be  produced, 
and  whether  it  is  well  produced,  is  left  to  the 
producers,  it  seems  unlikely  that  the  goods 
turned  out  will  maintain  so  high  a  standard 
as  when  they  have  to  pass  muster  before  the 
consumer  before  they  can  earn  any  reward. 
And  yet  such  seems  to  be  the  ideal  of  economic 
freedom  aimed  at  by  some  at  least  of  the 
Guildsmen,  for  we  saw  that  Mr.  Cole  main- 
tained that  the  workers  must  be  free  "  to  choose 
whether  they  will  make  well  or  ill." 

To  this  extent,  then,  it  seems  that  economic 
freedom  must  be  limited,  if  we  are  to  secure 
efficiency  in  production  and  freedom  for  the 
consumer  to  choose  what  goods  he  will  enjoy. 
And  since,  as  has  already  been  pointed  out, 
we  most  of  us  produce  only  one,  or  only  a 
fraction  of  only  one,  thing,  and  consume  thou- 
sands of  thinofs,  our  freedom  as  consumers 
seems    to    be    much    more    precious   than    our 


244     THE   CASE    FOR   CAPITALISM 

freedom  as  makers,  doers  and  growers  of  goods 
and  services. 

But  when  the  need  for  this  limitation  is 
granted,  there  is  a  great  range  of  economic 
freedom  left,  in  respect  of  which  Capitalism 
can  contend  that  it  confers  at  least  as  much  as 
any  other  possible  system  that  has  yet  been 
suggested. 

With  regard  to  the  consumer's  freedom,  it 
beats  State  Socialism  and  Guild  Socialism  so 
hollow  that  they  are  hardly  to  be  seen  on  the 
course.  Under  State  Socialism,  carried  to  its 
logical  conclusion,  the  consumer's  freedom,  and 
the  producer's  likewise,  does  not  even  "  Also 
Run."  Bureaucrats  will  decide  who  is  to  pro- 
duce what ;  and  the  consumer  will  take  what 
is  produced,  on  a  rationing  system  with  all  its 
exasperating  apparatus,  or  leave  it.  Mr.  Cole 
paints  too  flattering  a  picture  with  his  naughty 
but  amusing  jeer,  when  he  says  {Self-Govern- 
ment  in  Industry,  page  122),  "the  greatest  of 
all  dangers  is  the  '  Selfridge '  State,  so  loudly 
heralded  these  twenty  years  by  Mr.  '  Callis- 
thenes  *  Webb."  Mr.  Selfridge  gives  his 
customers  plenty  of  choice,  and  with  the  help 
of  the  adroit  Callisthenes  invites  them  to  come 
and  choose.  Mr.  Sidney  Webb,  with  scientific 
and  kindly  benevolence,  would  order  our  lives 


CAPITALISM   AND    FREEDOM     245 

for  us  much  better  than  we  could,  but  they 
would  lose  all  their  zest  because  they  would  no 
longer  be  ours. 

Under  Guild  Socialism  either,  according  to 
Mr.  Cole,  the  producers  are  to  have  the  choice 
whether  they  will  "  make  well  or  ill,"  or  accord- 
ing to  others  the  interests  of  the  consumers 
are  to  be  represented  by  apparently  elected 
bodies  which  will  leave  little  chance  to  those 
with  eccentric  tastes,  or  according  to  Mr. 
Stirling  Taylor  there  is  to  be  inter-Guild 
competition,  which  will  give  the  consumer  a 
chance,  but  seems  to  wreck  the  whole  Guild 
fabric,  which  appears  to  be  frankly  based  on 
monopoly. 

Under  Capitalism,  as  long  as  there  is  free 
competition,  the  average  consumer  decides 
what  is  to  be  produced,  and  the  wishes  of  mino- 
rities are  readily  met  as  long  as  their  demand 
is  great  enough  to  stimulate  production  to  meet 
them.  But  is  not  the  consumer's  freedom  to 
some  extent  threatened  under  Capitalism  by 
monopoly,  or  at  least  by  attempts  in  its  direction 
on  the  part  of  trusts,  "  combines,"  amalgam- 
ations, rings,  and  "  gentlemen's  agreements  "  .'* 
If  Capitalism  plays  this  game,  it  will  simply 
weave  for  itself  a  rope  with  which  it  will  be 
hanged,     and     rightly,    as    high    as     Haman. 


246     THE    CASE    FOR   CAPITALISM 

Monopoly  has  stunk  in  English  nostrils  since 
the  days  of  Elizabeth,  and  if  Capitalism  tries 
to  impose  it  now,  it  is  committing  suicide  and 
asking  for  State  Socialism.  It  is  true  that 
under  State  Socialism  monopoly  would  be  more 
tyrannous  than  under  private  enterprise,  because 
since  the  Government  would  itself  be  the 
monopolist,  the  helpless  consumer  would  have 
no  official  stick  to  lay  across  the  back  of  it. 
But  if  there  is  to  be  monopoly,  it  will  be  easy 
for  Socialists  to  persuade  the  public  that  in 
the  hands  of  the  State  the  monopoly  would 
create  profits,  not  for  a  profiteering  octopus, 
but  for  the  general  good.  Already  Mr.  Sidney 
Webb  has  made  the  recent  bank  amalgamations, 
though  they  are  far  from  having  set  up  any 
real  approach  to  monopoly,  a  text  for  an  adroit 
and  ingenious  sermon  on  the  need  for  State 
banking,  in  an  article  on  "  How  to  Prevent 
Banking  Monopoly,"  in  the  Contemporary 
Review  of  July  19 18. 

In  fact,  if  the  movement  in  favour  of  national- 
ization triumphs  and  proceeds  to  its  logical 
conclusion,  the  end  of  the  system  of  private 
Capitalism,  it  will  be  an  interesting  inquiry  for 
the  economist  of  the  future  to  consider,  how 
much  was  done  by  private  capitalists  and  the 
property    owning    classes    to    kill    a    system 


CAPITALISM   AND    FREEDOM     247 

which  might,  if  more  sensibly  developed,  have 
enjoyed  a  much  longer  life.  The  stupid 
financial  policy  of  belligerent  governments 
during  the  late  war  has  given  a  great  opportunity 
to  the  enemies  of  Capitalism  by  debauching  the 
currency,  pouring  fortunes  into  the  pockets 
of  shareholders  and  adventurers  through  the 
consequent  rise  in  prices,  and  so  stirring  up 
unrest  and  suspicions  of  "  profiteering."  Mr. 
Keynes,  who  develops  this  theme  with  brilliant 
lucidity  in  his  book  The  Economic  Consequences 
of  the  Peace,  observes  (page  222)  that  "perhaps 
it  is  historically  true  that  no  order  of  society  ever 
perishes  save  by  its  own  hand."  But  for  this 
breach  in  the  walls  of  Capitalism,  private  capita- 
lists, as  such,  are  not  alone  responsible  ;  it  was 
made  rather  by  the  politicians  of  their  class 
whom  the  wealth  that  they  created  enabled  to 
serve  their  country  according  to  their  lights, 
with  results  that  are  now  plainly  to  be 
seen. 

In  other  corners  of  the  economic  field,  how- 
ever, capitalists  have  themselves  worked  hard 
to  weaken  their  own  position.  By  continually 
resisting  the  claims  of  the  wage-earners  for 
higher  wages  on  the  ground  that  industry 
could  not  stand  them,  when  subsequent  ex- 
perience   proved    that    it    could,    they    have 


248     THE    CASE    FOR   CAPITALISM 

done  much  to  embitter  the  mind  of  the  workers, 
and  to  teach  them  to  beheve  that  they  could 
only  get  what  was  their  due  from  the  State. 
By  their  action  in  the  matter  of  piece- rates  they 
have  helped  to  increase  the  prejudice  among 
the  workers  against  being  paid  on  this  system, 
and  so  have  done  much  to  produce  that  deadly 
view,  so  fatal  to  efficient  production,  that  the 
best  workers  should  limit  their  pace  to  that  of 
the  average  or  of  the  worst. 

It  was  no  inherent  wickedness  that  led  them 
to  make  these  mistakes.  They  were  quite 
ordinary  human  beings  doing  their  best  accord- 
ing to  their  lights.  But  they  looked  to  the 
interest  of  the  moment,  and  their  mental  horizon 
was  bounded  by  the  date  of  their  next  balance 
sheet.  If  they  had  looked  further  ahead  they 
would  have  seen  that  it  would  pay  them  well 
in  the  long  run  to  pay,  not  the  lowest  wage 
at  which  they  could  get  their  work  done,  but 
the  highest  that  their  business  could  stand  ; 
and  that  if  a  man  earned  much  at  piece-work 
that  was  not  a  reason  for  cutting  down  the 
piece-rate,  but  for  encouraging  him  to  make 
more.  They  have  been  very  conscious  of  the 
fact  that  they  risk  their  money.  Have  they 
always  remembered  that  some  of  the  worst-paid 
wage-earners  risk  their  lives  ? 


CAPITALISM    AND    FREEDOM     249 

Again,  there  has  been  unnecessary  reluctance 
on  the  part  of  the  capitalist  in  publishing  full 
and  candid  statements  of  the  financial  position 
of  his  business.  The  accounts  issued  by  public 
companies  often  seem  to  be  arranged  to  give 
as  little  information  as  possible.  There  is 
much  excuse  for  this  attitude  owing  to  the 
desire  to  limit  the  power  of  possible  competitors 
to  pry  into  matters  that  it  is  more  pleasant  to 
conceal.  On  the  other  hand,  it  would  be  an 
immeasurable  advantage  if  the  workers  in  an 
industry  could  be  shown  more  clearly  how  it  is 
faring  on  the  financial  side,  and  if  the  problems 
that  its  managers  have  to  deal  with  were  put 
before  them  in  a  way  that  they  can  understand. 
By  this  system  it  is  possible  that  very  practical 
suggestions  of  great  value  might  be  made  by 
the  wage-earners.  With  regard  to  the  control 
of  the  conditions  under  which  they  work,  reform 
is  now  generally  admitted  to  be  due,  but  here 
again  capitalist  employers  have  been,  in  the 
past,  much  too  ready  to  resent  what  they  have 
regarded  as  interference  with  matters  that 
concern  them  only. 

To  bring  about  improvement  on  these  lines, 
no  revolutionary  change  in  human  nature  is 
required  such  as  would  be  necessary  for  the 
smooth  running  of  industry  by  State  or  Guild 


250    THE   CASE    FOR   CAPITALISM 

Socialism.  We  should  not  all  have  to  be 
suddenly  fired  by  zeal  to  work  for  others  with 
no  consideration  for  ourselves.  Capitalists 
would  still  be  working,  as  they  have  to  now,  to 
earn  profit  for  themselves  by  providing  the 
needs  of  the  community.  They  would  only 
have  to  recognize,  as  the  best  of  them  do 
already,  that  to  earn  larger  profits  for  the 
moment  by  paying  their  workers  less  than 
they  can  afford  to  pay  is  bad  policy  in  the  long 
run  ;  bad  for  themselves,  and  bad  for  the 
community  on  whose  prosperity  and  stability 
they  depend.  If  they  would  only  reflect  that 
if  they  earn  the  hostility  of  consumers  by 
attempts  at  monopoly,  and  m  the  wage-earners 
by  an  abuse  of  the  strength  that  their  wealth 
gives  them,  they  are  weaving  a  rope  for  their 
own  economic  necks,  they  would  be  learning 
a  lesson  that  would  be  of  great  benefit  to  them- 
selves and  to  everybody  else. 

Besides  their  shortsighted  attitude  to  those 
who  work  for  them,  capitalists  have  done  much 
to  undermine  their  own  position  in  the  eyes 
of  detached  observers  by  the  use  that  they 
have  made  of  the  wealth  that  they  have  gained. 
Much  of  the  academic  Socialism  that  is  rife 
among  what  are  called  the  educated  classes 
is  due  to  the  spectacle  presented  by  the  rich 


CAPITALISM    AND    FREEDOM     251 

bounder  spending  money  In  vulgar  ostentation. 
All  who  earn  or  own  wealth  have  to  remember 
how  much  of  it  they  owe  to  the  existence  of 
a  busy  and  prosperous  community  as  part   of 
their  raw  material,  and  how  little    they  could 
have  done  apart  from    that  environment,  and 
consequently  how  much  of  it  has  been  earned 
for  them  by  the   community  which  has  given 
them  their  chance.      By  bad  spending  they  ask 
industry  to  produce  bad  stuff.     By  good  spend- 
ing   on    worthy    public    objects     they    might 
transform  the  appearance  of  most  of  the  ugly 
and  depressing   towns  in   England,  and   give 
us   an   educational    system    thai   could    really 
afford  to  grant  every  citizen  that  is  born  to  us 
a  chance  of  growing  up  into  a  good  and  healthy 
man  or  woman,  fully  developed   in  mind  and 
body.     Here  perhaps  we   are  demanding  too 
great  and  rapid  a  change  of  outlook.     But  it  is 
surely  not  too  much  to  hope  that  the  capitalist 
may   learn   that,    when   he   wastes  money   on 
luxury,  he  not  only  exasperates  public  opinion, 
but  raises   the    price    of  necessaries,    and   so 
emphasizes  the  inequalities  which  are  so  danger- 
ous to  the  social  stability  on  which  his  existence 
depends.^ 

^  This  platitude  I  have  worked  out  in  detail  in  a  book 
called  Foiierty  and  Waste. — H.  W. 


252     THE    CASE    FOR   CAPITALISM 

These  inequalities  would  be  lessened  rapidly 
if  the  attitude  of  capitalist  employers  towards 
those  who  worked  for  them  were  modified  as 
suggested  above.  But  we  want  to  see  them 
attacked  at  the  other  end  at  the  same  time, 
by  the  wage-earners  recognizing  that  Capitalism 
is  not  an  evil  monster  that  robs  them,  but  a 
system  that  has  improved  their  lot  and  given 
life  to  millions  who  could  not  have  been  born 
without  the  industrial  development  that  has 
taken  place  under  it.  Owing  to  the  short- 
sightedness of  the  capitalist  employer,  they 
have  had  to  fight  hard  for  the  improvement 
gained,  but  if  they  want  to  emancipate  them- 
selves from  dependence  on  him,  is  it  not  easier 
and  safer  to  do  so  by  becoming  capitalists 
themselves,  and  providing  for  themselves  the 
management,  organization  and  plant  without 
which  labour  is  powerless  to  produce  ? 

To  this  end  again  no  great  revolution  in 
human  nature  is  needed,  but  only  a  develop- 
ment of  a  process  which  has  already  in  the 
Co-operative  Movement  produced  astonishing 
results.  The  War  Savings  Campaign  has 
taught  millions  who  never  saved  money  before 
to  save  it  in  order  to  save  their  country  when 
threatened   by    a  foreign   enemy.     All  that  is 


CAPITALISM    AND    FREEDOM     253 

needed  is  that  this  process  should  be  continued 
to  save  the  country  from  the  internal  enemy 
that  sets  class  against  class.  We  want  a 
financial  organization  by  which  wage-earners' 
savings,  that  now  go  into  Government  securities, 
can  go  into  industry  without  having  to  face  the 
risk  that  is  attached  to  investments  in  any 
particular  industry  or  company.  This  is  a 
problem  that  financial  ingenuity  should  surely 
be  able  to  solve.  The  workers  have  already 
shown  that  they  can  become  capitalists,  but 
what  is  wanted  is  that  more  of  them,  and 
ultimately  all  of  them,  should  be  capitalists. 
Then,  if  the  wealthy  continue  to  perceive  in 
a  widening  circle  that  it  is  not  good  for  their 
younglings  to  bring  them  up  to  idleness,  we 
shall  begin  to  be  within  sight  of  a  state  of 
things  in  which  every  worker  is  a  capitalist 
and  every  capitalist  a  worker. 

In  the  meantime  improvements  in  education 
should  ofive  to  all  a  better  chance  of  material 
success  in  life,  and  open  the  chance  of  a  career 
to  all  who  have  the  necessary  gifts  of  courage, 
honesty,  initiative  and  readiness  to  take  respon- 
sibility. Though,  owing  to  the  weaknesses  of 
Capitalism,  baser  qualities  too  often  earn  big 
rewards,  these  are  the  gifts  that  most  surely 


254     THE   CASE   FOR  CAPITALISM 

bring  success  under  it,  and  they  are  also  the 
qualities  that  make  a  great  nation.  With  these 
qualities  fully  developed  and  given  free  play, 
we  might  produce  a  country  in  which  all  would 
be  competing  vigorously  in  order  to  supply 
the  needs  of  the  consumer,  and,  wealth  being 
well  distributed,  great  profits  would  only  be 
earned  by  those  who  served  the  whole  com- 
munity best.  Great  profits  when  earned  would 
be  spent  sparingly  on  personal  enjoyment, 
lavishly  on  worthy  public  objects,  or  put  back 
into  industry,  thereby  quickening  production 
and  increasing  the  demand  for  labour,  and 
material  success  would  be  the  prize  of  energy, 
initiative  ^nd  courage,  wherever  found,  and 
so  would  stimulate  the  best  powers  of  active, 
bold  and  enterprising  men  and  women.  Such 
a  system  is  surely  more  attractive  to  those  who 
love  freedom  than  that  of  State  Socialism 
under  bureaucratic  control,  or  Guild  Socialism 
based  on  monopoly  and  a  society  grouped 
according  to  function.  It  would  stimulate  out- 
put to  a  degree  that  we  can  hardly  now  conceive, 
and  having  solved  the  problem  of  the  supply 
and  distribution  of  material  goods  would  enable 
those  who  lived  under  it  to  address  themselves 
to  the  task  of  building    up  a   real   civilization, 


CAPITALISM    AND    FREEDOM     255 

and  producing  a  world  that  should  be  not  only 
rich,  but  also  beautiful  and  noble,  full  of  wise 
and  beautiful  and  noble  men  and  women, 
competing  and  co-operating  for  the  common 
good. 


THE    END 


'V 


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llffillSHlfl'lir^°'°'^^^  LIBRARY  FACILITY 

AA    001  119  228    3 


